Unlocking Value

We, Argyle Street Management (ASM), plan to vote against the re-election of Elizabeth Kan (Elizabeth) at the annual general meeting of China Merchants China Direct Investments (133 HK, CMCDI) on 20 June 2024.

We found out that Elizabeth’s securities firm has been trading China Merchant Bank (CMB) shares.

Elizabeth, together with Mr. Victor Chu (Victor), her boss, are the two only Responsible Officers of FE Securities, an SFC-licensed securities firm.

CCASS data shows that FE Securities has been trading China Merchants Bank (CMB) shares in and out over the past decade. For a while, those CMB shares under FE Securities were worth millions of dollars.

The following chart (generated by David Webb‘s excellent tool) shows the history of FE Securities’ buying and selling of CMB shares.

While FE Securities traded CMB shares, CMB has been CMCDI’s single largest investment. Both Victor and Elizabeth were/are directors of CMCDI and Responsible Officers of CMCDI’s Manager.

The SFC has a strict code of conduct on a fund manager’s personal investments. Normally, a fund manager is not allowed to trade a stock with his/her personal account, when the fund he/she manages owns the same stock.

In light of the imminent AGM vote, Elizabeth owes CMCDI shareholders an urgent explanation:

👎 Who instructed FE Securities to trade the CMB shares? Were Victor and Elizabeth involved?

👎 Who are the beneficiaries of these CMB shares behind FE Securities? Are they related to Victor or Elizabeth (e.g. relatives)?

👎 Did Victor and Elizabeth tell CMCDI about these trades and seek CMCDI’s approval, before FE Securities did those CMB trades?

👎 Did FE Securities’ own investment in CMB influence how Victor and Elizabeth manages CMCDI’s investment CMB?

👎 If FE Securities thought it was a good idea to sell CMB shares and acted on it, did Victor and Elizabeth recommend CMCDI to do the same?

👎 Did FE Securities have insider information on CMB when trading CMB shares, given Victor’s and Elizabeth’s close links to China Merchants Group?

👎 Did FE Securities “front-run” CMCDI, before CMCDI itself sold a large quantity CMB shares a decade ago (which could exert downward pressure on CMB share price)?

👎 Shouldn’t FE Securities restrict itself from trading CMB shares altogether, to avoid any perception of conflict of interest and insider trading?

Visit us:  UnlockValueChinaMerchants.com

Write to us:  ChinaMerchants@asmhk.com

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我们 Argyle Street Management (ASM)计划在招商局中国基金（133 HK，“中国基金“）2024年6月20日举行的股东周年大会中投票反对重选簡家宜女士为董事。

我们发现简女士的证券公司一直在交易招商银行的股票。

简女士和諸先生是广利証券有限公司（FE Securities Limited）仅有的两位负责人 （Responsible Officer）。广利証券受香港证监会监管。

中央結算系統数据显示，在过去的十年里，广利証券一直在交易招商银行的股票，有买进也有卖出。在高峰期，广利証券名下的招商银行股票价值数百万港元。

下图由David Webb的中央結算系統数据分析工具制作，展示了广利証券在招商银行的持倉：

当广利証券交易招商银行股票时，招商银行一直是中国基金最大的单一投资。而諸先生和简女士当时/现在都是中国基金的董事，和中国基金管理人的持牌负责人。

香港证监会对基金经理的个人投资有严格的行为准则。通常，基金经理在管理的基金持有同一股票时，基金经理是不允许用自己的个人账户交易该股票。

鉴于即将召开的年度股东大会，简女士应紧急澄清以下几点：

👎 是谁指示广利証券交易招商银行股票？諸先生和简女士是否参与其中？

👎 广利証券背后的招商银行股票受益人是谁？他们与諸先生或简女士有关系吗（例如亲属）？

👎 諸先生和简女士曾否告知中国基金这些交易，并在广利証券交易招商银行股份之前，寻求中国基金的批准？

👎 广利証券对招商银行的投资，是否影响了諸先生和简女士管理中国基金对招商银行的投资？

👎如果广利証券认为出售招商银行股票是个好主意，諸先生和简女士是否也应该建议中国基金这样做？

👎鉴于諸先生和简女士与中国招商集团的紧密联系，广利証券在交易招商银行股票时是否拥有招商银行的内幕信息？

👎 广利証券是否在約十年前知道中国基金大量出售招商银行股票之前”抢先”交易(front run)，避过中国基金大手出售而对股价造成的压力？

👎 广利証券是否应该完全限制自己交易招商银行股票，以避免任何利益冲突和内幕交易的嫌疑？

访问我们:  UnlockValueChinaMerchants.com

电邮我们:  ChinaMerchants@asmhk.com