BoE stress tests: all you need to know

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

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Categorized | Financial

Hong Kong’s proposed listing changes fuel fierce debate

Posted on November 20, 2016

Fierce debate over a proposed shake-up of Hong Kong’s listing regime has resulted in claims that detractors are turkeys scared of Christmas and even split publicly the city’s Listing Committee — the nexus of the territory’s role as the world’s largest venue for public floats.

Plans to reform the opaque process would shift the city’s decades-old balance of power between investors and issuers, giving the former potentially a greater say and putting the regulator at the centre of the process.

So far this year, companies have raised $22bn floating in Hong Kong, compared with $12.8bn in Shanghai and $11.7bn on the New York Stock Exchange, according to Dealogic. The city has been a top-three venue in all but one of the past 10 years.

The proposals were put forward jointly by the Securities and Futures Commission, the city’s regulator, and the Hong Kong Exchange. A consultation period closed on Friday.

The scale of debate within the 28-strong listing committee itself went public last week when four members, including both deputy chairmen, published a submission broadly supporting the plans — contravening the committee’s majority-view opposition.

Analogies with turkeys’ lack of support for Christmas were made in committee meetings discussing responses to the changes, according to several members.

“Like all good turkeys, we don’t tend to support Thanksgiving or Christmas,” admitted one member, who felt the proposals complicated an already confusing process.

Hong Kong’s system gives a far greater say to those with vested interests in initial public offerings, such as bankers or accountants, than is allowed in London and New York, where the regulator approves IPOs.

Listing committee members include representatives from banks, law firms, accounting firms and listed companies. There are also eight investor representatives.

Those calling for change say the system, which was largely developed under colonial rule, was not designed to deal with the governance challenges posed by the influx of mainland companies that make up the bulk of those listing in Hong Kong.

The system’s ability to cope with this has been called into question following a series of incidents including inexplicable stock rallies and collapses as well as the use of newly listed companies as shells to help others avoid the full listings process.

Would-be public companies currently apply to the HKEx’s listing division, which refers them to the Listing Committee for approval. The SFC is also sent a copy of each application and it has a right of veto.

Responses to the consultation have not all been made public. Those seen by the Financial Times roughly split with investors in favour of the changes while IPO advisers are opposed.

“In Hong Kong investors are to be seen but must not be heard,” said David Webb, an independent shareholder activist, in his submission. He described the current committee as “stacked in favour of issuers and their paid advisers”.

The proposals would introduce two new bodies to deal with policy and regulatory issues — which sit largely with the listing committee — both of which would include the SFC as well as an investor representative as one of just three members from the listing committee.