Hong Kong’s Li Says Bourse to Avoid Worst China Accounting

Chinese companies in Hong Kong are less likely to fool investors than those in the U.S. because the city’s bourse does more to prevent fraud, said Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd.

The MSCI China Index of 147 stocks available to foreign investors is down 10 percent since reaching a five-month high on April 21. That compares with a 28 percent plunge by Chinese companies that went public through U.S. reverse mergers, in which a closely held company buys a publicly traded shell and retains the U.S. listing. While bearish bets on the MSCI China have climbed to a record, Li says companies listed in Hong Kong are subject to too much scrutiny to deceive the market for long.