Arab Today, arab today fitch warns of weaknesses in chinese firms
Last Updated : GMT 19:02:40
Arab Today, arab today
Arab Today, arab today

Fitch warns of \"weaknesses\" in Chinese firms

Arab Today, arab today

Arab Today, arab today Fitch warns of \"weaknesses\" in Chinese firms

Beijing - AFP

Ratings agency Fitch warned Monday of \"widespread weaknesses\" in Chinese corporate governance and a lack of \"quality information\" for shareholders after a spate of accounting scandals overseas. Chinese companies were at \"above average\" risk of being accused of fraud sometimes wrongly which could hamper their attempts to raise money, Fitch said in a report on Chinese corporate governance. \"Some of the accusations will be legitimate; some will be erroneous; many will be a mixture,\" Fitch said. \"All have the potential to present liquidity problems for an individual issuer and its closest peers.\" The Fitch report, which screened 35 companies it rates for governance issues, comes amid growing scrutiny of overseas-listed Chinese firms due to allegations of accounting irregularities and other problems. The US Securities and Exchange Commission has halted trading of several Chinese firms this year, accusing them of violations like keeping two sets of books or failing to disclose that their auditors had quit. Fitch said the flow of \"accusations and investigations\" was not expected to slow down in the near term. \"It seems that overseas investors are currently undertaking the job that China\'s underdeveloped capital market is not doing: that of challenging Chinese management to adopt higher standards,\" it said. Fitch said its ratings for Chinese companies were clustered around the \"BB level and below\" -- meaning a low credit quality -- and at investment grade and higher for the mainly state-owned companies. The ratings take into account China\'s \"underdeveloped legal system and documentation standards, distinct business practices and weak corporate governance\", it said. Fitch also noted that China lacks a \"sufficiently dispersed shareholding structure\" and \"quality information for shareholders\". The report comes after the Moody\'s ratings agency last week assigned \"red flags\" to 61 mainland firms with possible governance and accounting risks, triggering sharp falls in some Chinese companies listed in Hong Kong. Hong Kong\'s Securities and Futures Commission said last week it was \"looking into the matter\" of the report.

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Arab Today, arab today fitch warns of weaknesses in chinese firms Arab Today, arab today fitch warns of weaknesses in chinese firms

 



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