📖 ZKIZ Archives

Clean Up Our Financial Markets

2011-6-16  NM

From the perspective of anyone with an interest in the health of Hong Kong’s financial markets, we have to be very concerned with the recent events in the United Sates that raise questions over whether some of the private enterprise Chinese companies listed there are complete frauds.Charles Li, the Chief Executive of the Stock Exchange of Hong Kong, was right to point out to the press that many of the companies that are involved in the increasing number of scandals over there would not have remotely qualified for a listing in Hong Kong in the first place.

However, and his comments were broadly correct, this should not mean that we smugly go off into the distance thinking that the growing international mistrust of Chinese private sector companies, and their sponsor banks, is of no relevance to us.It is quite true that we may have listing rules and requirements in Hong Kong that would have stopped many of these particular, NASDAQ “backdoor” listing, companies coming to the local market, but the fact is that we have had more than our fair share of scandals anyway, despite our supposedly more onerous rules.Anyone with any involvement in the market here knows that in fact, we have a pretty strong stench coming from our own trail of corporate scandal here in our very own backyard. Companies with local and international management, focusing on overseas markets, have been racked by scandal, just as companies that are run on the Mainland by management from there, have also often been proven to be a minefield for investors. Moulin is a pretty good example of the former, and Sino-Forest looks to be turning out to be a pretty good example of a corporate fiasco from the mainland.Smug we should not be, especially as it can be argued that few, if any, of the backdoor listing Chinese companies in North America would have attracted long term institutional money and the goings on there, whilst embarrassing for the Exchange, do not impact the mainstream of key global investors.On the other hand, if Hong Kong holds itself out as being well regulated, it can be even more damaging when fraud and accounting irregularities hit the market as institutional investors have often been large holders in scandal hit companies here, because they are told that they operate under a “modern” regulatory regime.


As someone who sat on The Listing Committee for a recent four year period, that is the last organization that should be blamed for shortcomings in the system. It has a mandate to decide a number of things, but the one thing that it cannot decide is whether a company should be listed it or not. This approval is essentially a matter of fact. The rules and published precedents prescribe what criteria a company needs to meet before it can be listed, while sponsors, valuers and accountants have specified responsibilities, including the SFC-licensed sponsors of the issue having an overriding duty of care to carry out due diligence.If someone acting in a professional capacity in preparing a prospectus says that a certain fact is correct, and certifies that they have done the work to come to this conclusion, then neither the Listing Committee nor people at the Exchange can raise any objection.On a good number of occasions, draft prospectuses that were seeking approval were presented to be met with, let’s politely say, a degree of skepticism by members. However, the members’ raised eyebrows fell back to their normal positions when it became apparent that the sponsors had signed off on everything being dandy.The SFC does, however, also have a responsibility to vet prospectuses and they do indeed have powers that the Exchange does not have. So, it was good news this week when Martin Wheatley, on leaving his role at the SFC, raised the prospect of ensuring that professional advisers who knowingly, or unknowingly, are involved in preparing fraudulent new issue documents could face criminal charges in future.There is a dark underside to our financial markets, with a number of players who “play the game”, knowing that the current penalties, in the absence of investors being able to pursue class actions, are modest to non existent. As Chinese companies are undermining investors’ confidence in some overseas markets, Hong Kong needs to protect its reputation assiduously, which also means that local investors will also be better protected. Statutory backing to the Listing Rules, which is promised, and criminal sanctions against sponsors are both much overdue – let’s move ahead as quickly as possible.


Stephen Brown is a director of the Civic Exchange, a Hong Kong-based think tank.We are now on Facebook http://www.facebook.com/pages/Next2ndOpinion/464005150156

PermaLink: https://articles.zkiz.com/?id=25773

漲停板!你clean up了嗎?

2016-03-28  TCW

最近,Jenny聊起投資的股票已經連續幾天漲停板,話還沒說完,Bob忽然插嘴問:Did you clean up? Jenny不知為何他要問起大掃除,一時語塞。其實,clean up意指「大撈一筆」,美語中講到「賺大錢」有幾個特殊用語,分述如下。

to clean up 大撈一筆解析:to clean up最常見的意思確實是大掃除,但談到投資,也常被老美用來表示「賺很多錢」。

例句:During the period of economic recession, few people can clean up in real estate trading.

(在經濟不景氣時期,很少人能夠買賣房地產賺很多錢。)to rake in the dough大發橫財解析:rake是耙子,後面加上介系詞in就是大量取得(錢財)之意:dough的原意是生麵糰,常用衍生意為現金,rake in the dough就是「大賺、暴富」之意。

例句:A Iittle bird told me that Henry has raked in the dough in the future market recently.(有人告訴我,亨利最近在期貨市場發了一筆大財。

to make a bundle 發大財解析:bundle是指一大捆,to make a bundle就是指「賺了一大捆錢」。此外,像make a killing、make a fortune、make a packet、make a mint等,都是指發大財。

例旬:l made a bundIe in the stock market today.The three different stocks I bought rose simultaneously. (我今天在股市大有斬獾,手上的3支股票都飆漲。)


PermaLink: https://articles.zkiz.com/?id=191029

How China Small-Caps Can Come Clean

1 : GS(14)@2011-01-23 15:04:56


Rick Pearson is a Beijing-based private investor focusing on U.S.-listed China small-cap stocks. He is a contributing writer to TheStreet whose views on these stocks are independent of TheStreet's news coverage.

BEIJING (TheStreet) -- On Nov. 19, a certain company listed in the U.S. issued the following press release: (the "Company") today announced that it will restate its previously issued financial statements for fiscal years 2007, 2008 and 2009 and the first three quarters of fiscal year 2010 (including the quarterly data for fiscal years 2009 and 2010 and its selected financial data for the relevant periods), due to errors identified in these financial statements. This decision was made by the Company's board of directors, upon the recommendation of the audit committee and in consultation with management. As a result of this decision, investors should no longer rely upon the Company's previously released financial statements for these periods and any earnings releases or other communications relating to these periods. If this were a Chinese small-cap, the consequences would be predictable: widespread allegations of fraud, the stock would plummet 30%-50% and the usual five to 10 lawsuits would roll in within one week. But it wasn't a China small-cap. It was Green Mountain Coffee(GMCR_), and instead of falling, the stock price rose 11% on the day because the restatement was somehow perceived to be not all that bad. So almost four full years of finanicals can no longer be relied upon, and it's "not all that bad!?"

2010 was a rough year for Chinese small-caps, with a number of earnings restatements, allegations of fraud and confirmed outright fraud cases. Companies who have been (rightly or wrongly) impacted include Fuqi International(FUQI_), Rino International(RINO_) Northeast Petroleum(NEP_), China Sky One Medical(CSKI_), China Biotics(CHBT_), China Marine Food Group(CMFO_), China Education Alliance(CEU_) and Orient Paper(ONP_).
I provide additional detail below, but the key conclusion is simple. Obviously, there does exist fraud in some portions of U.S.- listed China stocks. However, the real problem for the larger space as a whole is that these companies are immature in the U.S. capital markets and leave themselves very vulnerable to speculation of fraud even when none exists. As a result, valuations for the entire space have been depressed.
In my opinion, this immaturity in the capital markets can be witnessed in numerous areas including: lack of emphasis on submitting correct domestic State Administration for Industry and Commerce (SAIC) filings, use of unknown auditors, inaccurate and outdated websites, unprofessional reliance on free email services (such as Yahoo! or Gmail), as well as a lack of responsiveness to investors. None of these things are an absolute indication of fraud, but they do weaken general investor confidence and leave companies vulnerable to speculation by short-sellers. The good news is that many companies (the smart ones) are starting to realize these weaknesses and are beginning to change accordingly.
I address each of these points below.
Lack of emphasis on submitting correct domestic filings
By now, anyone who is familiar with the recent spate of short attacks is well aware that the first line of attack by shorts is to cite the fact that a company's SAIC filings do not match its SEC filings. At first, many investors fell for this ruse blindly and viewed it as concrete evidence of fraud causing massive selloffs in a number of small-cap names.

The issue is actually more complicated than that. Much has been recently written about the significance of discrepancies between SAIC and SEC filings. My experience in dealing with many China small-caps leads me to several conclusions.

1. Minor discrepancies in SAIC filings are no cause for concern due to differences in accounting treatment as well as differences in revenue and income recognition for subsidiaries and international sales.
2. Large discrepancies can be (but are not guaranteed to be) a cause for concern. I have spoken with many Chinese CFOs, and many of them have never even paid attention to their SAIC filings. The filings are a perfunctory administrative filing that is often delegated to junior non-financial staff or even outsourced to third-party filing agents. In addition, these statements are not audited by U.S. or Chinese auditors.
Therefore, in many cases they may have no relation to the legitimate profitability of the company. I do, however, view large discrepancies as a red flag and a cause for concern, partly because it reflects sloppiness on the part of management and partly because it opens up the company to short speculation or an outright short attack
3. The real filings that matter are the SAT (Tax) filings of the Chinese company. The Chinese government is focused on collecting tax revenue, and senior management does pay attention to these filings. As a result, if SAT filings do not match, it can be a cause for significant concern. Unfortunately, unlike SAIC filings, these documents are not public and in fact are almost unobtainable. It is possible to get them in some circumstances and can be a very clear indicator of the presence or absence of fraud.
4. The conclusion is a bit complicated, and many investors miss this important nuance. There are two types of corporate structure for Chinese small-caps, variable interest entities (VIEs) and foreign invested enterprises (FIEs). Getting into all of the details is beyond the scope of this particular article, but I hope to do so later. The relevant point to consider here is that for an FIE structured company, the SAIC and SAT financials are reconciled and audited in China and should definitely match. If they do not, then there exists a high probability of either SEC fraud in the U.S. or tax fraud in China. Neither of these things is good. But if the filings do all match up, then much concern can be alleviated.

The good news going forward is that companies are starting to see the havoc that SAIC filings can wreak upon their company. I am increasingly hearing that going forward, companies will make it a priority to file SAIC filings themselves with attention from senior management and that they will make sure that the filings do indeed reflect the profitability of the business which should therefore also match the SEC filings. What we will see going forward is that historical SAIC filings do not match, but 2010 and onward filings will be largely correct. Also, in my dialogue with Chinese companies, I am strongly suggesting that they make an effort to make their own SAIC and SAT filings public (disclosed on their Web sites). Whether or not this actually happens remains to be seen.

Use of unknown auditors
Many Chinese small-caps began their public existence as tiny micro-cap reverse mergers. They therefore engaged small unknown accounting firms who were cheap and willing to do the work. As the firms grow, it is obviously appropriate to switch to a top 10 auditor, or perhaps even a big four auditor. Large companies who use no-name (or even shady) auditors are a major red flag for me and there have been many times where I avoided a company that had great financials simply due to its choice of auditor.
Again, the good news for 2011 is that this is already starting to change and in this area, Chinese small-caps clearly "get it."
Based on recent discussions with China small-cap companies, I expect to see a wave of auditor upgrades during early 2011; hopefully some will be in time to process 2010 10Ks due out in March or early April. This will greatly enhance investor confidence in the space, and I believe it will help separate the good companies from the bad. Companies who are unwilling to upgrade to a reputable auditor will see their share prices suffer.
Recent examples of auditor upgrades that have recently occurred include:

It should be noted that there are more than 500 Chinese companies that trade in the U.S., and it is simply not feasible for all of them to be using big four auditors. For most of the smaller companies, I am perfectly happy with the selection of a top 10 auditor, including auditors such as BDO or Grant Thornton which have a strong and reputable China practice.

Inaccurate and outdated Web sites

It is important to remember that with many of these companies, senior management is not fluent in English and therefore does not focus on their English language website. This is often delegated to an outside firm to design on a one-time basis, and Web sites are not updated. Clearly, this is unacceptable. I have invested in companies that I felt were very solid, and in my discussions with management, I emphasized that their Web sites (which are often downright pathetic) can be a deterrent to other investors and can therefore impact the stock price.
In my experience, many Chinese companies still don't get it, and I still see many terrible Web sites even at companies that are performing very well financially. Typically, companies that use a solid IR firm will have a better-looking Web site, but that is still no guarantee that it will be updated on a regular basis. I am hopeful that this will start to change, and in some instances, I see progress, but in 2011, I still expect to see many pathetic Web sites for Chinese companies.
Also, stating the obvious, even while a great company may have a terrible Web site, a fraudulent company may have a fantastic Web site. The point is that a bad Web site is unacceptable for a company that wants to be shareholder-friendly and, despite being a triviality, it can have an impact on investor demand for the shares, thus affecting the share price.
Unprofessional reliance on free email services
When an investor tries to email the CFO of a NYSE, Nasdaq or Amex-listed company (with a market cap of perhaps several hundred million dollars) and the CFO can only be reached at wang1634@ yahoo.com, it certainly does not inspire confidence. In fact, it immediately conjures up the image of a fraudulent company operating out of someone's basement. With one company, I was so adamant about it changing to professional emails that I even bought a domain name for the company and signed it up for email. The company's excuse was that it had been using the existing Yahoo! email so long that it was reluctant to change. Ultimately, it did acquire a real domain name and now they use professional emails. It took more than a year.
Again, this is very common in China at companies big and small, public and private. It does not raise any eyebrows with investors in China at all, but for companies listed in the U.S., it is not acceptable simply due to the negative image it creates among investors. That said, even a fraudulent company (or perhaps especially a fraudulent company) can have a very professional-looking email address and not be legitimate. My point is that this is just a cosmetic issue that companies need to pay attention to.

Lack of responsiveness to investors

There is a wide gap between Chinese small-caps in terms of their responsiveness to investors. Yesterday, I sent an email to a Chinese small-cap company's internal IR person; he called me within an hour and he was very well informed. In other cases, companies are slow to respond, if they respond at all. Some of this can again be blamed on the language gap, but for larger companies, they either need to be able to respond to investors on a timely basis or cough up some money and hire an external IR firm. The ones who figure this out will trade much better than the ones who don't and as a rule I make it a point to not invest in companies who are not responsive.
The conclusion I reach from all of this is that, while there are frauds in Chinese small caps, the very widespread lack of confidence and depressed valuations for the space as a whole are a crisis of their own making. Some companies will figure this out and make the right changes and will see a benefit to their share price, others will not and will continue to languish.
My goal in 2011 will be to distinguish between the companies that can make these changes on a rapid basis and restore investor confidence. Obviously, the most important changes will be the switch to focusing on filing correct SAIC documents (and hopefully disclosing them) as well as the upgrading of auditors. I am hopeful that we will see significant progress in this area in the first quarter of 2011 and I will be sure to highlight companies that are making the right moves.
Disclosure: The author is long ONP.
The author can be reached at [url=mailto:[email protected]]comments @ pearsoninvestment.com. [/url]
2 : GS(14)@2011-01-23 15:05:31

imeigu.com 2010-12-23 22:46:37 来源:i美股 原文链接 作者: 共 7 条跟贴
一位专注于中国概念股研究的美国投资者Pic Pearson 近日在TheStreet撰文表示:在中国在美上市的有些小公司确实存在欺诈行为,而投资者对整个中国概念股的信心不足和估值偏低,其实是这些公司一手造成的。如果这些公司能知错就改,立即采取有效地措施,他们的股价也会随之上涨。而那些执迷不悟的公司只能被投资者遗弃。


“根据公司审计委员会的建议以及在跟管理层商议后,公司董事会做出以下决定:本公司将重新公布2007财年,2008财年、 2009财年及2010财年前三个季度的财务报表,原因是在这些财报中发现了错误。在公布这一决定后,投资者将不要再依赖公司之前所公布的错误财报信息。”


















另一个好消息是,现在有许多公司的管理层已经开始认真地做起他们的SAIC文件,从而确保这些文件可以真实的反映出公司的财务盈利能力,当然也必须跟 SEC文件相匹配。我在跟这些公司管理层交谈时,我也强烈建议他们作自己的SAIC和SAT公开文件(在其网站上披露)。不过这种建议到底是否可行还有待观察。


许多中国小型公司都是通过反向收购的方式在美成功上市。因此,他们会雇用一些不知名的、便宜的、规模较小并且愿意为他们工作的会计公司。随着这些公司的不断成长,他们会重新聘用知名的会计事务所,其中就包括我们通常所提及的“四大” ,而那些仍然在聘用不知名的会计事务所的公司现在已经曝露出危险的信号。

不过可喜的是, 这些公司已经清楚地认识这一问题的严重性,他们现在已经开始做出一些变化。 我希望在2011年初,我们能看到一波更换公司财务审计机构的浪潮,并希望在明年3月份或者4月初,这些公司能在2010-10Ks中公布这些信息。届时必将大大提高投资者对整个中国概念股的信心,并将“好”“坏”公司区分开来。那些不愿更换审计机构的公司到时只能坐等股价大跌了。


需要指出的是,在美国交易的中国公司超过500家,不要指望所有公司都能聘用四大会计事务所来充当他们的审计机构。对于那些小型中国公司来说,我想“top 10”会计事务所是一个不错的选择,如德豪会计师事务所、何均富会计师事务所等,他们在中国都有着不错的口碑。






如果投资者想要向给在纽交所、纳斯达克或者美交所上市的中国公司CFO发送电子邮件时,只能发到如[email protected]这类地址,这势必会消弱投资者对公司的信心。通常,人们提及“欺诈”首先想到的是就是公司在地下室经营的场景。我是极力主张公司向专业邮件依赖的转变,我甚至恨不得给这些公司买一个域名,通过它来向公司发送电子邮件。但这些公司给出的理由是:他们的管理层已经使用yahoo邮件很长时间了,因此他们不愿做出变化。




本文作者为Pic Pearson 是一位专注于在美上市中国公司股票研究的投资者,目前持有东方纸业的多单。
PermaLink: https://articles.zkiz.com/?id=272693

Next Page

ZKIZ Archives @ 2019