Strong SGX signal against dubious practices

VICTIMS of the collapse in Singapore-listed China companies - or S-chips as they are known in the local market - might view the latest regulatory announcement by the Singapore Exchange (SGX) as being too little too late, but it is nonetheless a step in the right direction since it suggests it will be that much harder from now on for companies to pull off dubious accounting tricks at the expense of investors.

In his regulator's column on Tuesday, new SGX chief regulatory officer Tan Boon Gin flagged suspiciously large and adverse changes in the finances of companies with big China operations, including those which operate in the textile and sporting goods, manufacturing, heavy industries, packaging, electrical and electronics, retail and chemical sectors. "Some companies... made significant loans and advances to business associates, which were not part of the normal course of business. These debts were eventually deemed uncollectible and written off," wrote Mr Tan. Other examples cited were customer claims for compensation which were more than 10 times …