Sunday 13th January 2019

Dear Reader,

NEW ARTICLES
China First Capital (1269): part 2
We continue our investigation into the UK joint venture, following a "clarification" announcement late on Christmas Eve. (13-Jan-2019)

Last chance to satirise the anthem
In case you've lost that lovin' feelin' for the Chinese markets. (10-Jan-2019)

RECENTLY ON WEBB-SITE
Brexit and customs from a HK perspective
Theresa May has pursued 2 conflicting objectives: leaving the customs union; and keeping the UK/EU customs border open. HK people are used to a customs boundary with the rest of China, with no impact on sovereignty. Similarly, Northern Ireland should choose between remaining in the EU customs union post-Brexit with a boundary down the Irish Sea, or leaving the EU customs union and having a hard border with the Republic of Ireland. Only then can the UK or GB have independence in trade negotiations with other countries and deliver a proper Brexit. (17-Dec-2018)

IN OTHER NEWS
SFC fines FWD Life Insurance HK$2.4m for understaffing
SFC, 8-Jan-2019
Perhaps FWD stands for "Fund Without Drivers".

SFC prohibits brokers' client from placing orders for derivative warrants
SFC, 4-Jan-2019
The SFC sketches allegations that a trader bought warrants, then bid up the underlying stock, then sold warrants, then sold the stock, and somehow made a profit repeating this pattern despite the often-wide spreads in DWs. In our view, a binding order can never be false, and the SFC should not encourage the fallacy that bids and offers in the market should provide a predictive price signal to investors. They are no more than bids and offers capable of being executed. The investigation continues - but aren't there better things on which to spend limited enforcement resources?

How activist Webb earned 20% a year investing in Hong Kong stocks (video)
Bloomberg, 4-Jan-2019

The 20%-a-year stock picker who wishes his edge would disappear
Bloomberg, 3-Jan-2019

SFC fines Ardon Maroon Fund Management (HK) Ltd HK$800k for wash trade
SFC, 27-Dec-2018
The SFC says that but for the firm's financial position, the fine would have been heavier. So they weren't too hard on Ardon. The firm is now named China Silver Asset Management (HK) Ltd.

Court orders boiler room fraudsters to compensate investors
SFC, 24-Dec-2018
It doesn't actually know who the human fraudsters are, but it's got their corporate bank accounts, containing HK$600k, which will now be distributed to 14 victims pro rata to the amounts they sent in.

Kenneth Yeung Bing Kwong v Mount Oscar Ltd | California action
HK Court of First Instance, 24-Dec-2018
War has apparently broken out in the Yeung family, which controls jewellers King Fook (0280) via Yeung Chi Shing Estates Ltd. Kenneth Yeung unsuccessfully challenges his removal as director of a subsidiary of YCSEL, Mount Oscar Ltd. He has launched a separate action in California against various relatives and companies.

Man charged with HK$680k conspiracy to bribe HKJC members
ICAC, 19-Dec-2018
Comment: It's been a while since the last one, but with only 200 Voting Members able to nominate new members of the Club, and the incorrect presumption of respectability that membership buys, the system invites corruption. The Club should just sell the available memberships by regular sealed tender and stop trying to act as arbiters of probity.

SFC takes CMBC Capital (1141) and 6 former directors to MMT | The bubbles in CNN
SFC, 18-Dec-2018
This alleges late disclosure of market gains in its securities portfolio in 2014, including shares of Icube (0139), Heritage (0412) and Rising Development (1004), all of which have since been renamed. All 4 companies were then in what we call the "Chung Nam Network". On 8-Jan-2015, we warned the market about bubbles in 2 of them.

And much more besides...
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David M. Webb
Editor, Webb-site.com