Block: Number of HK-Listed Companies Are Committing Fraud

The video discusses governance issues in Chinese companies, highlighting the spectacular implosion of Huishan Dairy. It examines the Hong Kong market's unique challenges, including frequent fraud and stock manipulation due to small public floats. The manipulation often involves the chairman controlling a significant portion of the float, making it difficult for short sellers to operate effectively.

What governance issue is highlighted in the case of Huishan Dairy?

• Improved cash flow

• Expansion into new markets

• Increased profits

• Disappearing board members

What is a common problem among companies listed in the Hong Kong market?

• High employee turnover

• Excessive government regulation

• Lack of innovation

• Frequent fraud and stock manipulation

How do small public floats contribute to stock manipulation?

• They increase transparency

• They make it easier for chairmen to control the market

• They attract more investors

• They reduce market volatility

What percentage of the float is often controlled by proxies in manipulated stocks?

• 30-35%

• 5-10%

• 20-25%

• 10-15%

Why is it challenging for short sellers to profit from manipulated stocks?

• The stocks are not listed publicly

• The stocks are too volatile

• The stocks have high dividends

• The stocks are difficult to break