Sharks Continue to Circle China Stocks 在美上市中国企业将持续面临做空和法律诉讼压力
The year of the Rabbit may be one that many US-listed Chinese companies would rather forget, and now it’s looking like the Year of the Dragon may offer little relief, as short sellers and class action lawyers continue their assaults. In the latest news, Muddy Waters, whose name became synonymous with short selling attacks on US-listed Chinese firms last year, has renewed its recent attack on Focus Media (Nasdaq: FMCN), while a law firm is putting out a call for investors to join its pending class action lawsuit against information technology software maker Camelot Information Systems (NYSE: CIS). Let’s look at Focus Media first, which has always been a slightly controversial company for various reasons, making it an easier target for short sellers like Muddy Waters that try to raise doubts about such companies’ accounting and other strategic issues to pressure their share prices. Muddy Waters first raised doubts about one of Focus Media’s transactions that looked unrelated to its core outdoor advertising business last year (previous post), and now has issued a new report questioning the size of its LCD screen advertising business. (Chinese article) This kind of repeated attack looks similar to another assault on a similarly controversial company, Qihoo 360 (NYSE: QIHU) by another small short seller, a company called Citron, and I suspect in both cases each short seller has bet big against its target and could lose big money is the share prices don’t come down some more. In the end I wouldn’t be surprised to see both short sellers lose big money on these bets, though not before both Qihoo and Focus suffer damage to their reputations. Meantime, a law firm is putting out a final call for plaintiffs to join its planned class action lawsuit against Camelot over a big drop in its price last year, which the law firm blames on misleading information put out by the Chinese firm. (law firm announcement) We’ve already seen a few similar lawsuits filed against US-listed Chinese firms after many saw their stocks drop dramatically last year amid a series of accounting scandals that undermined the entire sector’s credibility. In the end, this kind of lawsuit will probably result in a settlement, costing Camelot millions or even tens of millions of dollars. But over the longer term these lawsuits are likely to be relatively insignificant for larger companies like Camelot, though some smaller firms that come under similar attacks could ultimately go bankrupt and be forced to de-list.
Bottom line: Short seller and class action lawsuit attacks against US-listed Chinese firms will continue into the first half of 2012, but should start to ease after that.
Related postings 相关文章:
◙ Cleanup Resumes, Facebook Sniffs Out China Investors 在美上市的中国企业将继续面临“大清洗”
◙ Citron Keeps Up Qihoo Assault 香橼继续攻击奇虎
◙ CDC Kicks Off China Bankruptcy Parade 中华网打开赴美上市公司破产魔盒
