Re: Sorting Through the Chinese Reverse Merger Debacle
driven
6/18/2011 9:15:08 PM
Great analysis and helpful advice. I agree with Asa - it's difficult to understand what they have to do sometimes.
Re: The primary goal of Chinese Stock Market
AskAsa
6/18/2011 11:30:46 AM
Your reply adds even greater insight to an excellent article.
For many of us here it's hard to wrap our heads around the things foreign companies must do to survive in a planned centralized economy.
Re: Good Advice
Phoenix
6/18/2011 10:42:41 AM
Yes I agree with you that it's better to be cautious even though there may be some good opportunities out there. Some companies even lost most of their value recently due to claims of fraudulent accounting practices. Even if the accusations are proven wrong most investors are bound to be more cautious when investing in Chinese firms.
Re : Sorting Through the Chinese Reverse Merger Debacle
yalanand
6/17/2011 1:32:42 PM
Tony,
Thanks for explaining about reverse merger in detail. Is there any limit on the number of companies a shell/holding company can acquire using reverse take-over method ?
The primary goal of Chinese Stock Market
Value Hiker
6/17/2011 1:21:13 PM
Few foreigners know that the primary goal of Chinese stock market is not to facilitate the promising enterprises to raise the Capital for growth. Its primary goal is to save & enrich these (central or local) government controlled companies.
For a company to go public, it matters far less how profitable the company is during the past 3 or 5 years, it is the relationship with the government that counts the most.
It looks like in US, if Google wants to go public, it has to acquire the Fannie Mae first, the use Fannie Mae 's identity to go NASDAQ, crazy? unfortunately that is how the IPO game played in China.
So far, the game has been played well, Government & Government related enterprises made tons of money from stock market, and common shareholders was ripped off again and again.
Now it seems the domestic shareholders in China finally wised up, and do not want to play the game anymore, they shift their money to Real Estate Market,
Then these robber barons in modern China, look for outsider to rob, jointed force with the rogue brokers in US, they start to rob native America investors, who need to find a higher return than the miserable interest rate Bernake offered. so there will be blood on the street again.
To be fair, there are many Chinese companies are really profitable, managed by capable managers, But too many bad apples are in the barrel at this time.
Tony,
Thanks for offering the thoughtful analysis. I like China and not all reverse mergers can be painted with the same brush.
On GPRC, though, the trading volume still seems marginal to me. Just 37K shares daily average for last 3 months per Yahoo finance. At current pricing, this is less than $100K per day.
I'll need to understand something about why it's down 70% for the year before deciding that we know more than the stockholders who've been sellling it for months and still seem to be of that mind.
Chaos
Good Advice
tokyogai
6/17/2011 9:31:39 AM
I think the advice you give is really right on the mark. I would caution people though, that even if it is audited by a big name firm, check to see which branch and what the track record is. Some of the big firms have local subsidiaries that do not work to the same standard. There really are opportunities, but be cautious.
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