iv)
Takeover Code: In Hong Kong the takeover code had statutory force because it was administered by the Security and Futures Commission and not, as in London, by a separate body. Mr Hay Davison thought that it was reasonable to expect foreign-domiciled companies seeking a listing in Hong Kong to agree voluntarily to abide by the takeover code. It was not true, as Mr Keswick claimed, that foreign-domiciled companies listed in London were not subject to the London takeover code. practice control was exercised by requiring such companies' advisors to behave in accordance with the code.
In
Summing up, Mr Hay Davison said that the aim should be a regional market in which foreign-domiciled companies were able to trade happily by voluntarily accepting the rules of the market rather than submitting to local legislation.
5. Mr Hay Davison said that he believed that Jardines were simply looking for excuses to delist. Mr Keswick's criticisms were trivial. It was not true that Hong Kong was trying to replicate London. Indeed in making his recommendations he had tried to avoid the errors of the Financial Services Act. The Securities and Futures Commission was modelled on New York not London. He did not believe that it had excessive
discretionary powers. Mr Owen was doing a good job and had improved the performance of the stock exchange in a number of areas. Mr Hay Davison did not believe that a decision by Jardines to delist would do serious damage. We should not exagerate the importance of Jardines. They were only about number 10 in the league table. They were not in the same class as, for example, Swires or Hutchisons and their local subsidiaries were not of the same quality. They had a poor relationship with the Chinese. In any case, delisting would cause Jardines difficulties. Some 90% of its shareholders were in Hong Kong. He thought that the Hong Kong Shanghai Bank was more critical to the Hong Kong economy than Jardines.
6. Mr Hay Davison said that the aim of his report had been to establish Hong Kong as an international centre operating under international rules. But he had failed. It was not, and never had been, a major international exchange, although because of its developed infrastructure it would remain a major fund management centre and a convenient place to do business. But a greater volume of the top Hong Kong shares was already traded in London than in Hong Kong. Only 4% of private capital formation in Hong Kong came from the stock exchange. In South East Asia it was normal practice to spread investments throughout the region, operating in a number of regional financial markets, in contrast to Europe where there was a much greater tendency to concentrate on a single market, usually London. He suspected that after 1997 the Hong Kong stock exchange would revert to its pre-1987
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