Half of the companies listed on the mainland-dominated bourse in Hong Kong could face delayed financial results due to the ongoing coronavirus outbreak.
The recently imposed travel restrictions to mainland China are expected to materially hinder the efforts of auditors attempting to meet the March 31 deadline for all listed companies’ financial results of the previous fiscal year ending December 31. In response, the Hong Kong and Clearing (HKEX) and the Hong Kong Institute of Certified Public Accounts are holding an urgent meeting today to address the problem, according to an «SCMP» report citing unnamed sources.
Companies based in mainland China make up nearly half of the Hong Kong stock exchange – 1,241 out of 2,449 total listed firms – accounting for 73 percent of its market capitalization and 83 percent of average daily turnover.
Possible Solutions
The two bodies will discuss possible solutions to tackle the issue including an extension to the deadline beyond March 31, the source said. Another possible solution that could be potentially less disruptive to the reporting season is to provide extensions only to companies that can prove they are affected by the Wuhan coronavirus outbreak.
Without being able to visit factories and offices, credible auditing will be impeded but the gains are far outweighed by the health risks from the epidemic which has been confirmed to infect 7,771 individuals and cause 170 deaths in mainland China. Whilst various measures have been made to contain and combat the virus, there are doubts about the government’s effectiveness with the latest from Wuhan mayor Zhou Xianwang claiming that lack of transparency and timeliness of response was due to crippling rules imposed by Beijing. Such statements were broadcasted on state television just days after the mayor claimed that 5 million people left Wuhan before the city's lockdown.
