Companies with effective independent directors can better manage risks andensure minority shareholders’ interests are protected. We believe Hong KongExchanges’ proposed changes to the Corporate Governance Code will result in animprovement in Board quality for those with weak Board independence. Theyinclude companies in the utilities, property and gaming sectors, which currentlyfare the worst among Hang Seng Index constituents, with 40-70% of theirindependent directors serving more than nine years and sitting on multiple Boards.Longfor, Galaxy Entertainment and Li Ning will have to appoint newindependent directors under the proposed change, which may improve Boardquality. Financials (HSBC, BOC) scored well on diversity, with the highestpercentage of female Board members (~20%). Laggards were utilities (HK &China Gas, Power Assets).