Markets have interesting dynamics and network connectivity via globalization makes it interesting to watch.
Its still early days in the Chinese markets, you can think of them like the pioneer days in the US. But many large companies are not afraid to go in and do the hard work to integrate into those emerging markets. Today, Walmart announced that they will start selling online in China, for example. Walmart has around 300 stores in China already and booked $7.5 Billion in revenue there last year.
There are lots of stories about how worried we're supposed to be about buying stock in Chinese companies, but what about the impacts of open US markets on China companies? Turns out there is a whole cottage industry in the US of short sellers talking BS about China companies to drive their share prices down.
A recent example of this is a shot attack on China Agritech that drove the share price from $15 to $6, because the shorts claimed the company was a scam with no real operations, but a large shareholder is fighting back:
“It would be easy to walk away at this point,” said Glickenhaus, whose family company has $1.3 billion under management. “It’s not nothing, but it’s not a big deal for us financially. The real reason we’re fighting is because we believe someone blatantly lied to short the stock.”
And as it turns out, there are collaborators working on ideas to publish hit pieces to hammer other small China companies, shorts "throw some stink" as Mark Cuban was alleged to on CFSG on the companies to drive share prices down. A number of these collaborators' messages are available here and talk about ways to get creative on ideas that will bash the stock and make a fast, easy profit for the shorts, while the company's price gets hammered and the investors suffer.
Smaller, Chinese companies are easy targets, they lack a big Four auditor and PR savvy execs, plus like the penny stock fraudsters know its much easier to manipulate the shares of a $50M China Ag firm than a couple hundred billion China telco. It will be interesting to watch if the large shareholders and/or any SEC actions begin to curb this dynamic.
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