TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
Comments
Ray Chan
30 July 2015
Chinese market regulators blame short sellers for the rout in the country’s equity markets, but the accusation seems baseless as overseas money managers only represent a fraction of exchange traded funds tracking mainland stocks.
Overseas investors taking bearish bets on Chinese stocks represent less than 1.2 per cent of the total assets under management of ETFs, according to data provider Markit. In contrast, domestic investors poured a record 57.6 billion yuan in July into the money-market ETF in China as they tried to shield their money from the fall in equity values.
“The recent market route cannot be blamed on short sellers of ETFs,” said Relte Stephen Schutte, an analyst at Markit, wrote in a note to clients. “Securities lending data shows that this accusation is by and large overblown, given the minimal short selling in mainland listed single names.”
“Investors have been able to gain short exposure to sell Chinese markets by using US and Hong Kong listed ETFs, essentially circumventing measures by the Chinese government to limit such activity domestically,” he added.
Small-cap stocks seem to be the target for foreign investors.
The Deutsche X-trackers Harvest CSI 500 China A-Shares small cap ETF (ASHS) which tracks the movements in 500 companies listed in Shanghai and Shenzhen is the most short ETF exposed to the region, with 53 per cent of shares outstanding on loan and US$17 million of the value on loan.
The Deutsche X-trackers Harvest CSI300 China A-shares ETF is the most in demand ETF from short sellers, since the instrument offers investors a exposure to the 300 most liquid mainland stocks, but the cost to borrow is staggeringly high at 29 per cent, compared with 8 per cent seen in ASHS.
Bond king Bill Gross previously said the richly-valued small-cap stocks in China were at bubble valuations, calling it “the short of a lifetime”.
China’s state-owned media such as the official Xinhua news agency have accused foreign investors of taking short positions against Chinese stocks and are to blame for a market rout that wiped out US$3.9 trillion of value in three weeks last month.
The China Securities Regulatory Commission, the country’s market regulator, said it was investigating investors who used stock index futures to short the market and it would send criminal cases to the police, but foreign fund managers own less than 3 per cent of Chinese stocks, while retail investors represent more than 80 per cent of market participants.
Short positions on mainland-listed 95 ETFs was virtually zero, compared with US$1.23 billion worth of shorting among 185 foreign-listed ETFs, according to data compiled by Markit.
After Beijing employed a raft of measure to bolster equities, including a ban on what it calls ‘malicious short selling’, turnover in China’s two bourses slowed to about 1.2 trillion yuan, far below their record of more than 2 trillion yuan fuelled by margin financing or borrowed money to buy stocks at the height of the rally which hoisted shares to a 7-year top on June 12.