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作者: 来源: 日期:2016/11/10 8:47:56

China’s corporate governance standards fall





China’s attempts to open up its equity markets to foreign investors could be undermined by the country’s deteriorating standards of corporate governance.


In recent years Beijing has pushed for its $7.5tn mainland A-shares market to be incorporated into the widely followed MSCI Emerging Market index, which could open the door to hundreds of billions of dollars of foreign portfolio investment. Many commentators expect MSCI to grant approval next year after turning China down in June.

近年来,北京一直在推动7.5万亿美元市值的内地A**场被纳入广受关注的明晟新兴市场指数(MSCI Emerging Markets Index),这可能会使A**场迎来规模庞大的境外证券投资资金。许多评论人士预计,在今年6月拒绝中国之后,MSCI将在明年6月把中国A股纳入该指数。


China has also started to open up its market through such measures as Shanghai-Hong Kong Stock Connect, a similar link for the Shenzhen market, due by the end of the year, and the Qualified Foreign Institutional Investor scheme, all of which allow foreign investors to buy into mainland Chinese stocks.



However, biennial research by the Hong Kong-based Asian Corporate Governance Association, a non-profit organisation, suggests standards of behaviour in China’s equity market are plunging, even as they are improving in regional rivals such as Japan, Taiwan, India and South Korea, threatening to deter foreign investors increasingly focused on governance issues.



The overall effect of China going into the MSCI would be disastrous,” says JP Smith, partner at Ecstrat, an investment consultancy. “Ill-informed investors buying the index for asset allocation reasons would be exposed to companies with terrible governance. There is no way MSCI should consider adding China to the index.”

“中国**被纳入MSCI指数总体上将是灾难性的,”投资咨询公司Ecstrat的合伙人JP•史密斯(JP Smith)说,“出于资产配置原因而买入指数的消息不灵通的投资者,将承受治理水平极差的公司所带来的相关风险。MSCI绝对不应考虑把中国**纳入其新兴市场指数。”


Minority shareholders are just there as a potential source of cash. There is really not a reason for them to be acknowledged at all,” he adds. “Governance has definitely been getting worse.”



In its 2016 Corporate Governance Watch report, the ACGA awarded China an overall mark of just 43 per cent, continuing the country’s decline from a high of 49 per cent in 2010.



In contrast, India, ranked level with China in 2010, has risen to a record high reading of 55 per cent, while a swath of other countries in East and Southeast Asia stretched their lead over China further still, as the table shows.



There was a time, around 2010, when corporate governance reform in China was progressing at such a steady rate that we half-jokingly suggested it might catch up with Hong Kong in 2022. Those days are long gone,” says Li Rui, an analyst at the ACGA

“曾有一段时间,在2010年左右,中国公司治理改革以平稳的步伐不断取得进步,乃至我们半开玩笑地说,或许到2022年中国内地就能赶上香港了。那段日子早已经过去了,”ACGA的分析师Li Rui表示。


China’s score has instead been on a downward trend in recent years and it is hard to see what will change in the near future.”



The ACGA argues that China’s political and regulatory environment has deteriorated particularly sharply since 2010, as the second chart indicates.



Ms Li cites setbacks such as the circuit breaker temporarily imposed on the stock markets in January to attempt to slow a market sell-off, which was a “well-documented disaster, causing panic in China and around the world”, and Beijing’s tendency to implement periodic moratoriums on flotations, which “have done more harm than good, undermining both market stability and the value of the two stock exchanges as capital raising venues”.

Li Rui列举了一些退步现象,例如在1月份为了遏制**抛售而短暂实施的熔断机制——这是一场“证据充分的灾难,在中国和世界各地引起了恐慌”。还有,北京方面倾向于每过一段时间就暂停IPO,此举“弊大于利,损害了市场稳定性和两个证交所作为资本募集场所的价值”。广州投资翻译公司。


She is also critical of the weakness of measures to reform state-owned enterprises, which have not led to an infusion of private shareholders, lessened government intervention or created more diversified boards or better governed companies, as some hoped.



Talk of SOE reform led to a surge in the market, but most people would acknowledge that reform was a complete chimera,” says Mr Smith.



Moreover, China’s rating for the strength of its corporate governance rules and practices has fallen to the lowest level since the ACGA initiated its survey in 2003.



Ms Li criticises Beijing for its stalled attempts to update its Corporate Governance Code, which dates to 2002, despite the fact that “most Asian markets have revised their codes once, if not twice, since then”.

Li Rui对北京方面拖延修订2002年的《上市公司治理准则》提出了批评,而“自2002年以来,大多数亚洲市场已修订了一至两次治理准则”。


She also points to problems with board composition and independence, arguing that “the general consensus is that most independent directors are still just ‘vases’ in boards, there to add colour, not to object to decisions or provide useful suggestions”. This is largely because they are typically appointed or nominated by executive directors or the chairman, rather than general shareholders, so are not genuinely independent or committed to representing minority shareholders’ interests.



China has at least managed to maintain its score for enforcement at its 2014 level. The ACGA accepts that China’s regulators have become more active.



The China Securities Regulatory Commission investigated 71 cases of market manipulation in 2015, a near fourfold increase on 2014. In the first half of 2016 it issued 109 sanctions in 88 general enforcement cases, many concerning insider trading and manipulation, an 85 per cent year-on-year rise, and levied fines totalling Rmb2.55bn ($377m), almost 20 times the level meted out in the first six months of 2015.



The Shanghai Stock Exchange also issued 22 public reprimands and criticisms in the first half of 2016, a 150 per cent year-on-year rise, with its Shenzhen counterpart issuing 40 sanctions, a 40 per cent rise.



Despite this, the ACGA said two factors prevented China from raising its enforcement score: insufficient resources for enforcement, with regulatory staff typically inexperienced and too thinly spread; and a lack of participation by investors, particularly domestic institutional investors, in voting and company engagement.



Mr Smith argues that the clampdown on market manipulation ignored the fact that “the biggest market manipulator is the Chinese government and the Chinese authorities, the so-called ‘national team’, which gobbled up a huge chunk of the market” when stocks crashed in July 2015.



These state-owned financial institutions owned 11.9 per cent of the market at the end of 2015, according to Financial Times analysis of data from Wind Information, a research firm, although this figure has since fallen.

英国《金融时报》对研究公司万得资讯(Wind Information)数据的分析显示,2015年底,这些国有金融机构的持**值占到了**总市值的11.9%,不过,这一比例之后已有所下降。


Overall, Mr Smith describes the Chinese financial system as “crony entrepreneurialism” with a high degree of state ownership (56 per cent by market capitalisation by his calculations) and strong government control even of companies “purported to be run by entrepreneurs”.



The system is getting more arbitrary and more authoritarian. Minority shareholders are probably more right to be worried about China than anywhere else,” he adds.



I think they will do everything they can to make it look as though the A-share market is suitable to be integrated into the MSCI [index]. They talk a good game [but] there is a difference between rhetoric and reality.”



Mr Smith fears the problem is much larger than China, however, saying he would “take issue” with the ACGA’s view that governance is broadly improving in other Asian countries.



The very big picture is that the whole system has been moving in a much more authoritarian direction. It’s not just China,” he says, pointing to developments in the likes of Turkey, Russia, Poland and South Korea.



I think governance is getting much worse and the risks for minority investors generally are increasing; that is why I don’t particularly like emerging markets at the moment,” Mr Smith says.



Generally everywhere since the global financial crisis the idea that you move in a more liberal direction towards more dispersed control systems and minority investors having a lot of say has gone backwards pretty much everywhere.



Governments are increasingly intervening in a way that disadvantages minority shareholders. I have been a big believer in indexation [via passive funds] but now is the time not to index EM portfolios. The index players have no choice [what stocks to buy], Mr Smith adds.