From 2010 until now, we have seen and heard much about the chinese fraudulent stocks listed in US markets.
In my opinion, despite all this noise nothing has changed in China space for three reasons:
1. Before 2010 there were also Chinese RTO stocks which went to pink sheets or delisted.
The difference is in 2009 and 2010 many of these stocks upgraded to major exchanges but WITHOUT any change in their credibility.
the frauds in the RTO OTC stocks CYXI, CYXN, GUPR etc, have replaced
now by the ex-OTC RTO stocks like RINO, CAGC, CCME etc. There are still a
few like they was before, the same percentage of them.
The market consider the IPO chinese stocks as more safe. This is not
wrong, despite that there were and still are problems between them: DYP
before and now NIV, CIL and CDM. The number of supposed or proved
frauds between IPOs is increased, but we have to not forget that many
chinese stocks IPOed during 2009 and the number exploded in 2010.
So, the percentage of fraudulent chinese stocks is still low and not higher than it was the previous years.
3. The media gave much more attention to "China frauds" in 2010 and still do that, magnifying the problem. Why is that?
true reason is now many of these RTO stocks are listed in major
exchanges, its price is above $5 and they have a decent daily volume. So
now these stocks can be SHORTED. Take a look to seeking-alpha bashing
articles, all of them are for that kind of chinese RTOs, never for low
volume-low price stocks.
My conclusion is that
there is still stocks between the chinese IPOs to buy now at low prices
and chinese RTO to buy in the near future likely at lower prices than the
current, always after a thorough dd.
which announced already (good) results or an earnings announcement day are safer and can
make a major spike: BSPM for example, had a great day yesterday.
stock which will announce results soon is the small IPO AMCF, in 3/30.
It's traded at a p/e below 4, though never was accused for anything.