The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
It is doing so by closing down long existing loopholes in corporate governance and financial disclosure. Companies just entering the annual report season will be in for a shock. Where they might once have got away with churning out chalky explanations of the use of capital and their business performance, the CSRC is working to get companies to disclose information that is factual, accurate and complete, and in a timely manner. Auditors and board directors wonÆt be able to look the other way.
Across the strait, the Taiwan Financial Supervisory Commission recently intensified its battle for shareholder rights, calling for similar measures.
On top of the CSRCÆs agenda is ridding the market of the gossipy vines of private funds and management, whose trades are often cited as the cause of the volatility in China's equity market. The CSRC says, from now on, companies should uniformly turn down third-party requests for information that are outside of the requirement of the disclosure rules and get tough on implementing confidentiality agreements. Offenders who benefit from such information will be treated as if they have conducted insider trading and will be put on a registry that may carry penalty terms.
Meanwhile, the need for companies to follow fair value accounting practices in the reporting of business performance has been particularly stressed. The CSRC is highlighting areas of mergers, debt restructuring, holdings of foreign currency denominated derivatives, irregular trading and provision of guarantees, and asking company management to detail how these may impact shareholders financially when they happen.
Independent directors and auditors, who supposedly hold the roles as guardians of shareholdersÆ rights and counter-balances to the company management, will also see their roles enhanced to fulfil their purpose. Taking a leave from international practices, attendance and meeting records of independent directors will be in full view of the investing public from now on. And as they show up for meetings, the CSRC is stressing a genuine effort to examine financial reports and accounting records of the company, encouraging directors to question the companyÆs business performance, investments and financing activities.
2009 marks the 30th anniversary of ChinaÆs transformation from its strict communist economy to a quasi-capitalistic society. China still has a long way to go before organised shareholder activism will emerge. But that day may be moving closer with the regulators now recognising the importance of keeping companies in check.
The CSRCÆs new rules detail the workings of how shareholders should be informed about their investments; they also attempt to make management accountable for their decisions. These are nitty-gritty rules, but the crackdown is no small feat, especially in a market influenced by few large institutional investors but still heavily retail in its core.
Regional institutions’ investment managers outperformed their external peers, underlining that they are just as vital as modern asset allocation strategies.
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The RM82.64 billion ($20.6 billion) Malaysian Hajj fund, which recently completed a restructure, is looking to diversify globally but remains cautious of risky assets.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.