Hong Kong economic ‘devastation’ from unrest will soon be apparent, exchange chief says

The anti-government protests in Hong Kong have evolved over the months into a broad pro-democracy campaign. (AFP)
Short Url
Updated 09 January 2020

Hong Kong economic ‘devastation’ from unrest will soon be apparent, exchange chief says

  • Charles Li: I think local listed companies with local exposure are going to take a very big hit
  • HKEX posted an 8 percent drop in profit in the third quarter, its steepest slide in nearly three years

HONG KONG: The “depth of the devastation” inflicted on Hong Kong’s economy by more than six months of anti-government protests will be seen in the coming weeks, the chief executive of the city’s stock exchange operator said on Thursday.
Charles Li, the Hong Kong Exchanges and Clearing Ltd’s (HKEX) CEO, also told a Reuters Breakingviews event that what made Hong Kong great was “one country, two systems” — the framework under which the former British colony returned to Chinese rule in 1997.
“I think local listed companies with local exposure are going to take a very big hit. They already are taking a big hit. That’s going to continue,” Li said.
HKEX posted an 8 percent drop in profit in the third quarter, its steepest slide in nearly three years, as investor sentiment was hit by months of political unrest that pushed the Asian financial hub into recession for the first time in a decade.
Hong Kong-based companies, mainly from the retail and tourism sectors, are expected to show the scars of the sometimes-violent protests that forced businesses to shut and scared away visitors over the next few weeks when they report their annual results.
The anti-government protests in Chinese-controlled Hong Kong have evolved over the months into a broad pro-democracy campaign, with demands for universal suffrage and an independent inquiry into complaints of police brutality.
Many people in Hong Kong are angered by what they see as Beijing’s ever-tightening grip on the city that was promised a high degree of autonomy under the “one country, two systems” formula.
Beijing denies interference and blames the West for fomenting the unrest.
HKEX earnings for the full year are, however, expected to be bolstered by a pick-up in share sales in the fourth quarter with e-commerce giant Alibaba Group Holding Ltd. raising almost $13 billion from its secondary listing in Hong Kong.
The Hong Kong exchange launched a surprise $39 billion approach for the London Stock Exchange Group in September, but withdrew it after failing to convince LSE management and investors to back the move.


NMC Health removes CEO amid investigation of UAE firm’s finances

Updated 27 February 2020

NMC Health removes CEO amid investigation of UAE firm’s finances

  • Chief Executive Prasanth Manghat was dismissed with immediate effect
  • Chief Operating Officer Michael Davis was appointed as interim CEO

NMC Health has removed Chief Executive Prasanth Manghat with immediate effect and granted its finance chief extended sick leave, as more details emerge from an investigation into the UAE health care firm’s finances.
Abu-Dhabi based NMC said after Wednesday’s market close that it had appointed Chief Operating Officer Michael Davis as interim CEO to succeed Manghat and said Chief Financial Officer Prashanth Shenoy had been placed on longer leave.
Manghat had been with NMC for about 10 years in various roles, including deputy CEO and CFO, and had seen the company through its 2012 listing on the London Stock Exchange.
The moves are the latest blow for the firm whose shares have lost about two thirds of their value since US-based short-seller Muddy Waters late last year questioned its financial statements.
NMC had said at the time that the report was “false and misleading,” but had opened its own investigation into company finances. The review is being led by Louis Freeh, who was director of the Federal Bureau of Investigation in the United States from 1993 to mid-2001.
NMC on Wednesday said the investigation committee had identified supply chain financing arrangements that were entered into by the company and “which are understood to have been used” by entities controlled by founder BR Shetty and former vice-chair Khaleefa Butti Omair Yousif Ahmed Al Muhairi.
Reuters was unable to reach Manghat, Shetty and Muhairi for comment outside business hours on NMC’s latest statement.
The company, which operates clinics and hospitals, specialized maternity and fertility clinics, and long-term care homes in 19 countries, said the committee was reviewing a drawdown of its facilities that had not been disclosed or approved by the board.
Its shares closed 6.6% higher before Wednesday’s statement.
NMC also said it had suspended a member of its treasury team over possible discrepancies in its bank statements and ledger entries, and said it would be unable to publish its annual results till at least the end of April.
Indian billionaire Shetty resigned as NMC’s co-chairman this month, after British regulators said they were looking into NMC following a disclosure that he had misstated the size of his stake.
Shetty had said this month that his NMC shareholdings were under a legal review looking into a large portion of his shares signed to two of NMC’s top investors in 2017, while some of his other stock had been pledged as security against loans.