Friday 30th September 2016

Dear Reader,

The Joint Global implosion
A collapse in a hub of the "Chung Nam Network" has wiped about HK$2bn off the balance sheets of at least 11 listed companies, many of which never announced that they had invested in it. We piece together an ugly jigsaw and call on the SFC to investigate and HKEX to wake up and require announcements. (30-Sep-2016)

China Innovative Finance (0412) bubble
Hao Tian Development (0474) has confirmed our view by dumping 9.06% of CIFG at a 61.9% discount, still well above the net tangible asset value of $0.099. CIFG should trade below NTAV due to its appalling governance and membership of what we call the "Chung Nam Network". The purported profits of its leasing division are largely illusory and depend heavily on 1 customer in which CIFG has invested. HTD has also been allowed by HKEX to skirt the Listing Rules on corporate transactions.. (26-Sep-2016)

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)

Ex-engineering firm proprietor gets 35 months for HK$45m bribery over tender rigging exercises
ICAC, 29-Sep-2016

GET (8100) injects 1.61% of China Parenting (8361) for 17.75% of Finsoft (8018)Finsoft announcement
Company announcement, 27-Sep-2016
In our view, China Parenting is a bubble stock, trading on about 6.6x NAV. On 31-Jul-2015 GET acquired a 2.73% stake in return for issuing 14.91% of itself to China New Economy Fund (0080). Pass the parcel. Finsoft shareholders would have to be either mad or conflicted to approve this, which of course they probably will.

6 months' jail for offering perfume to HSBC staff
ICAC, 27-Sep-2016
It's getting so hard to open a bank account these days that it's come to this!

Convoy (1019) accumulates 16.12% of First Credit (8215) for HK$198.9m
Company announcement, 27-Sep-2016
First Credit is also 19.84% owned by GET (8100), 9.65% by Jun Yang (0397) and 4.13% by Universe (1046). Convoy is 5.4% owned by GET and 9.93% owned by Jun Yang, and GET is 16.67% owned by Universe, amongst others in this network of companies that investors should avoid.

Hysan Development v Town Planning Board
HK Court of Final Appeal, 26-Sep-2016
In a major development in HK jurisprudence, the CFA adds a 4th leg to the proportionality test when restricting a constitutional right. If the restriction pursues a legitimate aim, is rationally connected to that aim and is no more than is necessary to achieve that aim, then the 4th leg is whether a reasonable balance has been struck between the societal benefits of the restriction and the infringement of the constitutional right, asking in particular whether it results in an unacceptably harsh burden on the individual. Kudos to Hysan for bringing this case.

And much more besides...
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