© The Financial Times Ltd 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Things keep getting worse for Sino-Forest, the Toronto-listed Chinese forestry company that filed for bankruptcy protection last week.
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
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
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
That, at least, is the verdict of the bond market. Read more
Well this news didn’t come as a surprise, but we almost missed it: Sino-Forest on Sunday announced the resignation of its chairman and CEO. The announcement came quiet as a mouse, after a very confusing news day for Sino-Forest investors at end of the trading week.
On Friday the Ontario Securities Commission ordered shares to “cease trading” on the Toronto Stock Exchange and called for the resignation of senior executives at the company. Later that day the OSC reversed its order, stating it does not have the power to make such an order without holding a hearing first. Excerpts from Sunday’s statement below the page break… Read more
(The OSC has reversed its order calling for the resignation of senior executives at the company, including chairman and chief executive Allen Chan.)
This just in: Sino Forest shares have stopped trading on the Toronto Stock Exchange following a “cease trade” order from the Ontario Securities Commission on Friday morning.
The reasons given by the OSC (after the page break) are not going to help Sino Forest’s case. Read more
The old adage of ‘buy on a rumour, sell on a fact’ appears to have turned on its head. Read more
After weeks of allegations from short-seller Muddy Waters, Sino Forest held an analyst call on Tuesday in a bid to assuage the concerns of investors – who have watched the share price plummet 70 per cent in recent weeks – and to announce first quarter earnings.
Maybe it was the awkward way in which a few analysts’ questions were cut off, or the way some questions were ignored entirely, that unsettled the market: immediately after the call, the stock fell 12 per cent on the Toronto Stock Exchange. It closed down 32 per cent. 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