BT gave early warnings about foreign listings - Apr 07, 2009 (BT)
The Straits Times / The Business Times News On SPH
BT gave early warnings about foreign listingsReader remembers that SPH's The Business Times was well ahead of this issue.
Apr 07, 2009
The Business Times
THE Singapore Exchange's (SGX) latest statement recognising the risks of foreign listings is timely as there has been a spate of 'blow ups' in a number of foreign companies listed here.
Cases where owners of such companies have cooked books, gone missing or being forced sold is rattling investors at a time when the stocks of many of these companies have already plunged or been suspended.
Questions are being asked about whether perpetrators can even be sued or extradited. Investors are now wondering how accurate the financial statements of such foreign companies are and whether more companies have inflated books but have yet to be discovered.
I remember that The Business Times (BT) was well ahead of this issue at the time these foreign companies began listing en masse on our stock exchange.
In a letter by experienced investor Kenneth Pang on Jan 21, 2003, entitled How safe are foreign incorporated firms? Mr Pang asked astutely regarding such companies 'Is our money safe in these places?'.
The issue continued in a front page article on Feb 13, 2003 - Rise in Bermuda firms on SGX raises red flags - which raised concerns about the rights of shareholders of these companies and whether the companies were subject to the same corporate laws as locally listed companies.
In yet another article on Aug 13, 2003, BT asked China plays or Bermuda plays? In the article, the seasoned journalist questioned '. . . it would be natural to ask whether something untoward is going on?' he also commented that many such firms '. . . are unknown entities with financials that are difficult to verify; disclosure is usually poor, with important information buried inside the IPO prospectus'. These and other related articles published here over the past few years have certainly proven that BT was on top of this critical issue.
Investors who had followed this series of articles would have been more aware of the risks and should have been spared from the recent devastating plunge in share prices of many of these companies.
I am not saying all listed foreign companies are suspect, however, companies that straddle a number of jurisdictions do raise the prospect of more risk. Investors should therefore take proper care when they do their homework and follow media reports and analysis to ensure that their money will be well managed and protected before investing in these companies.
Ang Hao Yao