Governance standards in newly listed companies might not be as well developed as in more established ones, Securities & Futures Commission Chairman Martin Wheatley says, adding the issue will be closely monitored.

Mr Wheatley said Hong Kong will likely see a significant number of companies and trusts listing on the stock exchange this year, including a growing number of Mainland companies.

Sponsors must scrutinise information provided by the listing applicants with professional judgement. When issues or concerns are raised by professional advisers, the sponsors also have a duty to follow up with them, he said. "We will continue to monitor their performance and take firm action against sponsors who failed to comply with relevant regulations applicable to them."

Statutory backing

Mr Wheatley said another major task this year is to give statutory backing to important listing requirements.

"This will mean that some of the tasks now performed by the Stock Exchange will transfer to the commission and that a breach of the Rules will become a breach of the law. We believe this initiative will further improve the governance of companies and promote investor confidence."

On the REIT market, Mr Wheatley reminded investors not to jump into the recent rally of REITs recklessly, as applications for REIT listing will be refused if they do not meet the regulatory requirements.

The SFC also unveiled the latest findings on its derivative warrants investors survey. Retail participation last year had been significant in terms of the number of transactions, but not very significant in terms of transaction value.

Investment risks

About 4.7% of Hong Kong adults or 12.9% of retail investors invested in derivative warrants. More than three quarters of them traded warrants in the hope of getting short-term gains, and more than 90% of all warrant investors knew that the risks were high or very high. The commission will soon publish the summary of the result of last November's consultation on proposed measures to improve the market.

Mr Wheatley said the theme Investors First will continue be adopted.

"We firmly believe if the interests of investors are better protected, their confidence improves, together with market turnover and profit opportunities for everyone. As investors prosper, the intermediaries will flourish and the whole market will benefit."