Regulators crackdown on free speech to shield Chinese firms from criticism.
Regulators in Hong Kong have an odd way of soothing investor concerns. With global investors reeling over China’s stock-market roller coaster and weakening economic data, Hong Kong’s Securities and Futures Commission (SFC) is proceeding with unprecedented actions against the authors of two critical research reports. This crackdown threatens to chill free speech in China’s leading financial center.
In the first case, which went before an appeals tribunal last week, the SFC fined Moody’s Investors Service $3 million over a 2011 report raising “red flags” about dozens of mainland Chinese firms listed in Hong Kong. The regulator says Moody’s work was “shoddy and unprofessional,” with errors amounting to a failure of due diligence in preparing credit ratings.
But Moody’s report didn’t offer credit ratings, merely analysis of corporate-governance and accounting concerns common among Chinese firms. It didn’t examine new information or change its debt ratings. So the SFC’s claim to jurisdiction here, relying on its authority over credit ratings, is questionable. Read the rest of this entry »
America’s largest overseas creditor wasn’t exactly blown away by the deal Congress struck to avoid a potential default.
“[P]oliticians in Washington have done nothing substantial but postponing once again the final bankruptcy of global confidence in the U.S. financial system,” government-run Chinese news agency Xinhau Thursday.
Wednesday’s vote, the commentary said, “was no more than prolonging the fuse of the U.S. debt bomb one inch longer.”