Tuesday 6th September 2016

Dear Reader,

We need your support!

Submission to SFC-HKEX consultation on listing regulation
These are our views on SFC-HKEX proposals to reform regulation of listings and listed companies. If you are an investor who cares about the future of HK's markets, please submit your support. The proposals are better than the status quo, but a political compromise on the 2003 Expert Group recommendation to transfer regulation to the SFC, and that should be Plan B. (6-Sep-2016)

A sordid electoral affair
The HK Government, via its Electoral Affairs Commission, has tarnished HK's reputation for free and fair geographic elections for half of its Legislative Council, just to exclude a few candidates who were previously on the political fringe. There is nothing inconsistent between pledging to uphold the constitution and seeking to change it, and the Government now risks the courts overturning the election results. We also explain the fragmentation caused by HK's version of the party list system which has now reached epic proportions. (17-Aug-2016)

Union Asia (8173): unauthorised disposal of property
Company announcement, 4-Sep-2016
The company claims that its subsidiary surrendered a property for S$5.62m in April and the company didn't know until 2-Sep.

Trio in court over HK$450k false claims for lost registered mails
ICAC, 2-Sep-2016
After 1,531 claims each for a lost ball pen, HK Post began to suspect something was wrong. There's no fooling them!

Webb on "Backchat" re Legislative Council elections
RTHK, 2-Sep-2016

Freeman (0279) to buy People Securities Co Ltd
Company announcement, 1-Sep-2016
You can never own too many brokers. Freeman also controls Freeman Securities Ltd.

SFC fines BNP Paribas Wealth Management HK$4m for stiffing clients
SFC, 31-Aug-2016
The stiffees will now get a refund of HK$9.5m in excess charges.

Imagi (0585) to buy stockbroker John & Wong Securities Co Ltd
Company announcement, 30-Aug-2016
Another listed company in what we call the "Chung Nam Network" gets into broking.

Union Asia (8173) buys boat from Lam Kai Tai for HK$19m IOU, rents it out
Company announcement, 25-Aug-2016
The unnamed cruiser is 28.04 metres long. Vendor Lam Kai Tai is the Chairman of Enterprise Development (1808), another company in what we call the "Chung Nam Network".

L & A (8195): 1.6bn options exercisedCCASS deposits
Company filing, 24-Aug-2016
The holders of these 10-year options all forfeited the time value and exercised them on the day that they were announced, 22-Aug, having been purportedly offered or granted on 22-Jul. The new shares were probably deposited into CCASS on 24-Aug and 25-Aug, via FP Sino-Rich Securities & Futures Ltd (1.4bn) and Emperor Securities Ltd (0.2bn).

SFC suspends Ku Yuen Leung, ex-BOCOM, for 18 months
SFC, 23-Aug-2016
Our take: Mr Ku had deduced that an algorithmic liquidity provider would take his warrants if he bid for the related shares. Bids cannot be "artificial" as they are binding and capable of being hit. Order queues are not measures of demand and supply, they are just a series of binding bids and asks. A lot of demand or supply is not displayed, including that which buys from the best ask or sells to the best bid. The philosophy behind these prosecutions is flawed; the SFC should not encourage people to expect a directional price signal from the order queues.

HKICPA bans Steve Au Yeung Keung for 3 yearsCooking with gas
HKICPA, 23-Aug-2016
This case relates to fraudulent transactions in 2003/4 by Grand Field (0115) which Webb-site exposed in our 2004 article "Cooking with gas". Mr Au Yeung admits that he lied to the Stock Exchange and participated in the sham disposal of the bogus project. Since 2006, he has been the Company Secretary of China Energine (1185). Our take: he cannot be trusted with the affairs of a listed company and they should fire him.

And much more besides...
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