58.com may be frequently dubbed China’s answer to Craigslist, the pioneering US classified site. But its founder isn’t keen on the comparison. He has a bigger ambition: to be like Alibaba.
Jinbo Yao, founder and chief executive of 58.com, tells beyondbrics that he was initially inspired by Craigslist to found the company in 2005: “But we are different in terms of our business model. We hope 58.com will become a company like Alibaba, to connect merchants and users in the area of daily life services.” Read more
Who’s afraid of investing in small Chinese companies? Not US investors. Shares in Qunar, a popular travel website owned by Baidu, surged by as much as 133 per cent on their debut on the Nasdaq Stock Market on Friday.
The shares, priced at $15 a piece – well above the initial target range of $12-$14, ended the day at $28.40. Read more
Are US-listed Chinese stocks back?
Judging by the 42 per cent share price pop enjoyed by 58.com on its first day of trading on Thursday, one would be inclined to think so. Don’t get too carried away though. Read more
Two more Chinese companies are looking to try their luck on Wall Street.
500.com, China’s leading online sports lottery service provider, and Sungy Mobile, a mobile app developer have on Tuesday filed plans with the US Securities and Exchange Commission to raise up to $150m and $80m respectively via initial public offerings. Read more
The door is not exactly being kicked wide open. But after two years of accounting scandals and critical reports from short-sellers, Chinese companies are slowly making their way back to Wall Street again – and it’s not just Alibaba eyeing up New York.
On Monday, Qunar, a popular travel website in China, filed paperwork with the US Securities and Exchange Commission to raise $125m in an initial public offering.
The move comes just three days after 58.com, China’s answer to Craigslist, filed to list on the New York Stock Exchange with an offer to sell $150m of ordinary shares in the form of American Depository Shares (ADSs). A day earlier, Montage Technology Group, a Shanghai-based computer chip maker, raised $71m in its public debut. Read more
Remember the tiff between US and Chinese regulators over accounting regulatory standards? You know, the one that resulted in the SEC charging the Chinese affiliates of the Big Four audit firms (plus BDO) with violating US securities law after the five firms allegedly refused to turn over audit work related to nine Chinese companies being investigated for potential accounting fraud?
Well, after a 10-month stand off, it looks like some progress is finally being made to avoid an accounting Armageddon that could have led to the wholesale delisting of Chinese companies on US stock exchanges. Read more
The share price of Suntech, the Chinese solar giant now in bankruptcy court, jumped 15.6 per cent in New York on Monday after a Chinese media report said Warren Buffett might invest in the struggling company.
It’s the latest twist in the saga of Suntech’s spectacular demise. The company has gone from being the world’s largest solar company in 2011, to defaulting on international bonds worth $541m in March 2013, to landing in Chinese bankruptcy court late last month. Read more
The clash between the US Securities and Exchange Commission and China over accounting regulatory standards probably won’t come to a head for another ten months. But the prospect that the SEC’s high-profile attack on the Chinese affiliates of the Big Four and BDO could lead to a wholesale delisting of Chinese companies from the US stock market appeared enough to spook investors. Read more
Things are heating up between the US Securities and Exchange Commission and some of the US’s leading accounting firms.
The SEC on Monday charged the Chinese affiliates of Ernst & Young, PwC, KPMG, Deloitte Touche Tohmatsu and BDO with violating US securities law after the five firms allegedly refused to turn over audit work papers and other documents related to nine Chinese companies that are currently being investigated for potential accounting fraud. Read more
Investors who hope the accounting scandals involving US-listed Chinese companies will soon fade away should think again.
That’s the message from Paul Gillis, a Beijing-based accountancy expert. He says that there’s only a 10 per cent chance that the regulatory issues raised by the affair will be quickly resolved, a 70 per cent chance that the arguments will be “kicked down the road”, and a full 20 per cent chance of a Beijing-Washington bust-up which ends with the US forcing the delisting of American-listed Chinese stocks.
That would have repercussions far reaching far beyond the companies involved and their disgruntled shareholders. Read more
The proposal by Hong Kong’s securities watchdog to create an explicit civil and criminal liability for investment bank sponsors of new listings should be welcomed.
Yet, even if the Securities and Futures Commission gets what it wants – and that is a big ‘if’, since the proposals require a change to Hong Kong’s legislation – sponsors have little to fear. Read more
It is not a good week to be a promoter of US-listed Chinese companies.
First Nasdaq halted trading in Tibet Pharmaceuticals and Global Sources. Then Ernst & Young resigned as Sino-Forest’s auditor. And now a Chinese pork processing company has become the focus of a US Securities and Exchange Commission investigation on insider trading. Read more
By Alexandra Stevenson
When considering the risks of investing in Chinese companies, Sino-Forest typically comes to mind. Investors got burned for not probing its opaque accounting. But there is also a fully-disclosed accounting detail that investors in Chinese companies would do well to get acquainted with.
It’s called variable interest entity (VIE). Read more
Step by step, Sino-Forest is moving closer towards bankruptcy or a restructuring of its $1.8bn of bonds.
On Monday, the scandal-plagued Chinese forestry company announced it had received notices of default from the holders of its bonds due 2014 and 2017 after failing to publish its third-quarter results, which were due last week. Read more
For investors in Sino-Forest, the Chinese forestry group fighting allegations of fraud, things are going from bad to worse.
Late on Monday, the Toronto-listed company said it would miss an interest payment on its debt and was unable to say when it would be able to publish its earnings statement, which would put it in default on $1.8bn worth of bonds.
The company’s bonds fell sharply on Tuesday as investors continued to abandon what was once a darling of the Canadian stock market and one of the biggest issuers of debt the Asian bond market. Read more
Muddy Waters, the short-selling group famous for triggering the collapse in the share price of Toronto listed Chinese company, Sino-Forest, was at it again last week.
US-listed shares in the Shanghai advertising firm, Focus Media, dived last Monday following the publication of a less than flattering report by Muddy Waters, which alleged it had overstated the size of its advertising network. Read more
As investors have turned cautious and demand for technology IPOs has shrunk, these are great times for short sellers. Over the past year, firms like Muddy Waters and Citron Research have attacked one Chinese firm after the other with accusations of accounting fraud or other misrepresentations of fact, in the process bringing down some companies such as Longtop Financial.
But the attackers have their weaknesses as well. This week, Andrew Left, the short seller behind Citron Research, went for Qihoo 360, the Chinese internet security software maker. In a note published on Tuesday, he called Qihoo “the most overvalued and misunderstood Chinese Internet Stock” and set a target price of US$5 – 75 per cent below its current trading range. Read more
Short-sellers beware: shares in Toronto-listed Silvercorp Metals, the Chinese silver miner accused of fraud, are up more than 16 per cent in the past two days after it said earlier this week that KPMG Forensic published a report backing its financials. Read more
Claims from Anonymous, the amorphous cyber-collective, of fraud at Chaoda Modern Agriculture, a scandal-hit Chinese vegetable producer, on Wednesday revived the argument about transparency in emerging markets companies.
The activists’ report, which prompted the Hong Kong authorities to start an investigation into Chaoda and suspend its shares, comes hot on the heels of regulatory probes into Hong Kong-listed China Forestry and Toronto-quoted Sino-Forest. It’s enough to prompt a close look at EM earnings quality. And right on cue comes Morgan Stanley. Read more