Hong Kong's blend of London-style disclosure requirements with Chinese frontier capitalism is a formula for corporate craziness. The end of 2015 yielded an eyebrow-raising crop including a missing truck with precious cargo, a bunch of gangsters and a mystery share sale. The slowdown in the People's Republic, where many Hong Kong-listed companies are based, is likely to bring more strangeness to the surface.
From China Animal Healthcare came a story of missing documents. The group, backed by US pharmaceuticals company Eli Lilly, revealed a serious setback to a forensic investigation of its accounts on December 28: a truck carrying years of financial data vanished while the driver was taking a lunch break. The shares have been suspended since March. So, now, are any hopes of the company's problems being resolved soon.
China Shanshui Cement also misplaced papers in curious circumstances. Its new directors, installed after a power struggle, called police after finding records, data and company stamps missing from a Hong Kong office recently vacated by their ousted predecessors. They also claim a former official at Shandong Shanshui, "together with a group of gangsters", smashed up that mainland subsidiary's headquarters and assaulted staff.
The mystery around solar firm Hanergy Thin Film Power Group, whose shares haven't traded since halving in minutes in May, also deepened. Founder Li Hejun, once briefly reckoned to be China's richest man, now plans to sell a stake at less than one-twentieth of the last traded price. A clarification from the parent company that this was no "selloff" but a "debt financing arrangement" didn't quite clear things up.
Investors presumably want to see less of this in 2016. That wish is unlikely to be granted. China's woes will shine an unforgiving light on weak businesses and make it hard to raise fresh capital, in turn sparking more accounting questions, fights for control, and oddball disclosures. Investor Warren Buffett famously said that it's only clear who is swimming naked when the tide goes out. In the Fragrant Harbour that is certainly true.
From China Animal Healthcare came a story of missing documents. The group, backed by US pharmaceuticals company Eli Lilly, revealed a serious setback to a forensic investigation of its accounts on December 28: a truck carrying years of financial data vanished while the driver was taking a lunch break. The shares have been suspended since March. So, now, are any hopes of the company's problems being resolved soon.
China Shanshui Cement also misplaced papers in curious circumstances. Its new directors, installed after a power struggle, called police after finding records, data and company stamps missing from a Hong Kong office recently vacated by their ousted predecessors. They also claim a former official at Shandong Shanshui, "together with a group of gangsters", smashed up that mainland subsidiary's headquarters and assaulted staff.
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Investors presumably want to see less of this in 2016. That wish is unlikely to be granted. China's woes will shine an unforgiving light on weak businesses and make it hard to raise fresh capital, in turn sparking more accounting questions, fights for control, and oddball disclosures. Investor Warren Buffett famously said that it's only clear who is swimming naked when the tide goes out. In the Fragrant Harbour that is certainly true.