Thursday, September 06, 2012

Chinese Business Leaders and Investment Professionals Speak Out on Short-Selling of US-Listed Chinese Companies

In an open letter, a consortium of leading Chinese business executives and investment professionals spoke about short sellers that have been publishing negative reports on Chinese companies typically listed in the US.  When these reports were accurate and discovered problems in the Chinese companies, noted the business leaders, they have helped cleanse the environment. But, recently some of these short sellers started targeting legitimate companies with either no problems or minimal problems.  Their reports would take advantage of the information asymmetry between China and the US, noted the letter, and make misleading statements, knowing that their American readers have no way of verifying them. 

The investment professionals and Chinese company founders and executives strongly believe there is a huge pool of legitimate, exciting, and valuable companies in China.  They condemned the efforts of some short sellers to slam legitimate companies and deceive investors.

Noting that China is not well understood by foreign investors, the business executives and investment managers urged investors to seek trustworthy professionals for investment advice regarding Chinese companies, and not rely on institutions and individuals with fraudulent histories and serious conflicts of interest.