New Hong Kong Watch report warns of exposure risk to human rights violations via the Hong Kong Stock Exchange

Hong Kong Watch launches a major new report today on investor exposure to human rights violations via Hong Kong equity markets, which finds that a concerning prevalence of sanctioned entities from the People’s Republic of China (PRC) have securities purchasable by foreign investors via the Hong Kong Stock Exchange. 

Entitled Risky Business: how sanctioned entities access capital via Hong Kong, the report provides in-depth analysis of recent regulatory and policy changes in Hong Kong and the PRC to push Mainland Chinese entities to list in Hong Kong instead of other ‘offshore’ locations, such as the New York Stock Exchange, with more stringent due diligence requirements. 

It also analyses the compliance risks and due diligence challenges posed to foreign institutional investors by national security legislation in Hong Kong, and provides guidance for investors on best practice for human rights due diligence. 

Launched today at the Hudson Institute in Washington, DC, the new report will be presented later this month at launch events in the Houses of Parliament in London and the European Parliament in Brussels. The report launch event is hosted by Michael Sobolik, senior fellow at the Hudson Institute, and features insights on the report by Joey Siu, program associate at the National Democratic Institute, and Samuel Bickett, lawyer and author of Beneath the Harbor, a groundbreaking report on Hong Kong’s role in sanctions evasion. 

Authored by Hong Kong Watch Senior Research and Policy Advisor Thomas Benson, the report is based on original open-source research that examines the presence of US government-sanctioned PRC entities on the Hong Kong Stock Exchange. 

The report contains several recommendations for the international community, including governments and businesses. 

In particular, the report recommends that:

• Businesses revise their exposure to US government and other sanctions orders, and develop a robust human rights strategy that fulfils the requirements of the United Nations Guiding Principles on Business and Human Rights. 

• Where appropriate and safe to do so, foreign businesses and chambers of commerce should express their concerns about allegations of human rights abuses and the implementation of national security legislation and its impact on Hong Kong’s status as an international financial centre.

• Governments should harmonise sanctions lists to ensure that the purchase of securities issued by companies linked to human rights abuse are consistently prohibited across different jurisdictions, in order to limit sanctions evasion. 

• Where such legislation is not already in place, governments should introduce human rights due diligence requirements, including a statutory obligation to provide an annual report on the implementation of human rights due diligence, along all aspects of the supply chain, for all entities above a certain threshold of revenue, assets or staff. 

You can read the full report here.

Thomas Benson, Senior Research and Policy Advisor at Hong Kong Watch, said: 

“We are pleased to launch this new report and shed light on the ethical and legal risks to overseas institutional investors in Hong Kong equity markets. This report illustrates why and how Hong Kong equity markets are of key strategic importance to the Beijing government, and how Mainland companies with ties to human rights violations are able to use Hong Kong to access international capital markets and overseas investors. We hope that governments and business both heed the warnings contained within this report.”

香港監察最新報告警告投資香港股市可能招致人權風險

香港監察今天發表重要新報告，主題圍繞投資者投資香港股市所承擔的侵犯人權風險。報告發現，香港交易所上存在大量可供外國投資者購買的受制裁中國實體證券，情況令人擔憂。

報告題為《Risky Business: how sanctioned entities access capital via Hong Kong》，深入分析了香港和中國近期的監管及政策變動，這些變動旨在推動中國大陸實體在香港上市，而非在其他設有更嚴格盡職審查要求的「離岸」地區上市，例如紐約證券交易所。

報告亦分析了香港國家安全法例對外國機構投資者帶來的合規風險和盡職審查挑戰，並向投資者提供人權盡職審查最佳做法的指引。

這份新報告今天率先在位於美國華盛頓的哈德遜研究所（Hudson Institute）發布，另將於本月稍後時間在倫敦英國國會和布魯塞爾歐洲議會發布。今天的報告發布會由哈德遜研究所資深研究員Michael Sobolik主持，美國國際民主協會（National Democratic Institute）計劃助理邵嵐（Joey Siu）和律師兼《Beneath the Harbor》作者Samuel Bickett將就報告分享見解，《Beneath the Harbor》是探討香港規避制裁角色的創新報告。

報告由香港監察資深研究及政策顧問湯柏森（Thomas Benson）根據原創開源研究撰寫，相關研究探討受美國政府制裁的中國實體在香港交易所上市的情況。

報告向國際社會提出多項建議，包括各國政府和商界。

請在此處閱覽報告全文。

香港監察資深研究及政策顧問湯柏森表示：

「我們很高興發表這份新報告，揭示香港股市對海外機構投資者帶來的道德及法律風險。報告闡釋了香港股市為何和如何對北京政府具有重要策略意義，以及牽涉侵犯人權行為的大陸企業如何利用香港進入國際資本市場並招攬海外投資者。我們希望各國政府和商界都會正視這份報告發出的警告。」