Hong Kong has surpassed Singapore to become the major Asian market with the highest standards of corporate governance, according to the Asia CG Watch study from the Asian Corporate Governance Association (ACGA) and brokerage firm CLSA.
But both markets have suffered deterioration in corporate governance since the study was last conducted in 2012, the authors say, according to media reports. Hong Kong scored 65 points, down from 66 in the 2012 survey, while Singapore won 64 points in the latest study, down from 69.
The study, which is the most comprehensive survey of corporate governance in Asia, rates Hong Kong higher than Singapore because of a greater level of disclosure when it comes to the compensation of senior officials and price-sensitive information as well as its legal framework for dealing with insider trading and market manipulation, Bloomberg News reports. Elsewhere, the study applauds Singapore’s statutory removal of directors for fraud, the release of audited annual statements within 60 days and its mandatory quarterly reporting.
The study, which covers 944 countries and 12 major markets, names Hong Kong-listed HSBC and Standard Chartered among the companies in the region with the highest standards of governance. Also mentioned are OCBC and UOB in Singapore as well as TSMC, Mitsubishi, BHP Billiton, Panasonic and Fujitsu.
Even as governance worsened slightly in key markets, corporate policing in the region improved overall, the study notes, according to the Financial Times. The policing improvement is mostly due to government-led actions such as stewardship codes as well as increasing action from concerned shareholders, particularly in Japan.
‘In absolute terms, activism is definitely growing, but if you look at the investment industry as a whole it is still a minority of institutions that are taking it seriously,’ says Jamie Allen, secretary general of ACGA, in an interview with the FT.
