A bombshell report from Hong Kong Watch, a UK-based human rights organization, has sent shockwaves through the investment community. Released on June 11th, the report, titled “Risky Business: How Sanctioned Entities Access Capital via Hong Kong,” exposes a significant risk: unwitting complicity in human rights abuses.

The alarming finding? A substantial number of U.S.-sanctioned mainland Chinese entities are offering securities on the Hong Kong Stock Exchange (HKSE), readily accessible to international investors. This raises serious concerns about the potential for investors to unknowingly fund the Chinese Communist Party’s human rights violations.

The report delves into recent regulatory and policy shifts within Hong Kong. These changes have effectively incentivized mainland Chinese companies to list on the HKSE over stricter alternatives like the New York Stock Exchange. This influx, lacking the same level of due diligence, creates a breeding ground for ethically questionable investments.

For investors, this revelation presents a moral and financial dilemma. The report serves as a stark reminder to conduct thorough due diligence before investing in companies listed on the HKSE, carefully considering the potential human rights implications of their portfolios. The ease of access to sanctioned entities highlights a critical gap in oversight and raises questions about the future of responsible investing in the region.