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Feb 03, 2016

MSCI excludes 18 Hong Kong stocks for shareholder concentration

Index provider says regulation may not be enough to determine whether shareholder concentration has eased

After public consultation, MSCI has decided to cut 18 Hong Kong-listed stocks from its indexes because of their high concentration of shareholdings unless the companies can show that their free float has increased, the index provider says.

Hong Kong regulations regarding shareholder disclosure may not be enough to determine whether shareholding concentration has declined, so MSCI says it will ask the companies to make public disclosures as to their shareholder structure if they want to be considered for re-inclusion in the indexes.

Goldin Properties, which saw its stock price fall by more than 40 percent in a single session last year, will be excluded from the MSCI China Index, along with Imperial Pacific, MSCI says in an announcement on its website.

Goldin Properties, which has a market cap of $1.6 bn, is more than 95 percent owned by a group of 14 shareholders according to its most recent disclosure in May 2015. Imperial Pacific, which has a market cap of about $1.2 bn, is 98 percent owned by 19 investors, according to a notice dated two years ago.

Twelve stocks will be excluded from the MSCI China Small Cap Index, including Wanda Hotel Development and Bloomage BioTechnology. Another four, including Evergrande Health Industry and China Smarter Energy Group, will be excluded from the MSCI Hong Kong Small Cap Index.

‘As the current stipulated shareholding disclosure requirements in Hong Kong may be insufficient to conclude whether high shareholding concentration is no longer present, MSCI would review, if made publicly available, all voluntary disclosure of a more granular shareholder structure by such companies,’ MSCI says.

In other Hong Kong news, the city’s securities regulator has publicly censured the Asian unit of Goldman Sachs for misconduct while advising Hong Kong’s Wing Hang Bank during its takeover by Singapore’s OCBC.

‘Goldman Sachs executed 111 trades in the securities of Wing Hang Bank without making the requisite dealing disclosures and no prior consent was obtained as required for 26 of these trades,’ the regulator says in a statement on its website. No fine or penalty has been levied.