South Korea will lift a five-year ban on short-selling financial stocks on Thursday to boost trading activities as market conditions have improved this year on strong foreign buying, reports the FT’s Song Jung-a in Seoul. Read more
When a short seller launches a public attack on a company, the resulting storm can lead to a big dip in share price as investors digest the charge sheet – see Muddy Waters on Olam.
But African Bank, South Africa’s biggest household lender, saw its shares climb on Thursday despite a highly critical presentation by David Stemerman of Conatus at a conference in New York on Wednesday. A less-than-convincing case by the short seller? Or a question of the bad news already being out there? Read more
It has taken almost a week, but one of China’s biggest scrap metal dealers is finally ready for a, er, scrap.
China Metal Recycling, a HK$11bn company, was targeted by a Californian short-seller and research company on Monday. Glaucus Research Group, a new name on the beat-em-up circuit, issued a report on Monday accusing the the Hong Kong-listed group of exaggerating the size of its business. Read more
Just a year ago, nobody was surprised when a US-listed Chinese company was being accused of fraud and lies. One after another, firms that had gone public through reverse mergers were accused by short-selling firms like Citron Research or Muddy Waters to have cooked the books or misled investors.
But now Andrew Left (pictured), the man behind Citron, is under fire himself. Some of the people often counted among the best and brightest in China’s technology industry are ganging up against him, warning of “fraudulent analysts” and urging investors not to listen to him. 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
From Jim Chanos, best known for his strident bearish call on China to Muddy Water of Sino-Forest short-selling fame, shorting China has become something of an industry sport within the fund investment community over the past year.
But are those shorting Chinese stocks about to get their fingers burnt?
Société Générale certainly thinks so. According to analysts at the French bank, China is now “The World’s Most Crowded Short” and Chinese stocks are on the verge of a “massive short squeeze”. Read more
Shorters of overseas-listed Chinese stocks are coming out of the woodwork and they’re more shameless than ever. At an event in Bevery Hills devoted entirely to reverse mergers, a group of short sellers – many of whom are producing research alleging Chinese companies are fraudulent, and then taking positions against them to profit from share price falls – grabbed the chance to broadcast their success.
“This is harvest time for our side. If you don’t see a bunch of really wealthy guys up here, you’re not looking close,” one investor said, according to Reuters. Read more
Sino Forest is the latest company to exemplify what is fast becoming a truism: if a company has Sino or China in its name and was listed abroad via a reverse takeover, shorting it might be a very profitable play.
The Toronto-listed forestry firm plunged more than 20 percent on Thursday following a highly critical research report. China MediaExpress Holdings, a firm that places ads on buses, had its Nasdaq-listed stock halted in March after falling nearly 50 percent in six weeks. China Agritech, another Nasdaq-listed firm, had lost more than 60 percent since late last year before its shares were suspended. Read more