17 February 2020
A stockbroker in Hong Kong: the extradition bill raises concerns in the financial community. Photo: Bloomberg
A stockbroker in Hong Kong: the extradition bill raises concerns in the financial community. Photo: Bloomberg

HK financial community worried about extradition bill

Why is the financial community worried about the extradition bill?

Will the proposed legislation affect Hong Kong’s economy and business environment?

Many players in the financial industry, even those with little interest in politics, are starting to worry that they might get into trouble if they say something negative about a specific Chinese company in the future.

They have a reason to be concerned: some people did end up in jail for doing that.

In 2013, Wang Weihua, an Australian Chinese, was sentenced to 18 months in prison for writing negative investment analyses about Guanghui Energy Co. Ltd. (600256.CN), an Urumqi-based conglomerate whose shares are traded on the Shanghai Stock Exchange.

Wang had posted articles questioning Guanghui Energy’s financial reports on Xueqiu, operator of an online stock trading community in China. In those articles, Wang accused Guanghui executives of using accounting tricks to inflate profits in the financial reports and using back-door transactions to manipulate the company’s stock prices.

Guanghui filed a police report saying the company had been illegally maligned by negative and fabricated information.

When Wang returned to Shanghai to visit his family, police from Xinjiang paid him a surprise visit.

He was then detained by police for “harming the security market”. He received an 18-month jail sentence after being detained for over 10 months.

Chen Yongzhou, an investigative reporter from New Express, a state-backed tabloid, had a similar experience.

Chen published a series of reports on Zoomlion Heavy Industry Science and Technology Co. Ltd. (000157.CN) claiming that the state-controlled construction equipment maker was faking sales transactions.

Police later detained him on suspicion of tarnishing the reputation of Zoomlion. New Express made a bold move and published two front-page pleas for police to release Chen, but to no avail. He was sentenced one year and 10 months in prison.

Has China relaxed or tightened online speech on stock trading over last six years? The answer is quite obvious if we look at what happened to Xueqiu lately.

The website was suspended for seven days and its mobile app shut down in April this year. All comments now have to go through a censoring process before being published. The click rate on the platform has reportedly plunged by 80 percent., a popular financial news app in China, said it had been suspended by regulators. The company took its app and website offline and is now in the process of making changes to comply with regulations.

These incidents explain why many members of the financial community in Hong Kong fear that they might be extradited to the mainland if they criticize certain mainland stocks, and they could be accused of spreading rumors or even threatening national security.

We all know that a healthy stock market should allow financial analysts and other members of the financial community to express their views, be they positive or negative.

This article appeared in the Hong Kong Economic Journal on June 13

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist