Knowing China through Taiwan

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23 Chinese companies delisted in US since last year

  • Staff Reporter
  • 2012-08-14
  • 11:46 (GMT+8)
Stock traders in New York. (Photo/Xinhua)

Stock traders in New York. (Photo/Xinhua)

Since August last year, 23 Chinese concept stocks have been delisted from the three main board markets in the United States, including 15 from the Nasdaq, Money Week magazine reports.

Due to the high threshold for listing on China's capital markets, many companies have been listing on US bourses over the past few years. However, the situation changed from last summer, when many of the concept stocks were hurt by "attacks" from short sellers.

The share price of VisionChina Media fell more than 96% during this period to become the most bearish among all China concept stocks.

Since 2006, Andrew Left, who runs Citron Research, a short seller that publishes bearish reports on stocks, has given negative reviews to 21 overseas-listed Chinese companies. The shares of 16 of these dropped more than 80%, while another 7 were forced to withdraw from the US capital market.

On Aug. 7, Citron Research issued a report on Nu Skin, alleging that the maker of personal-care products was operating an illegal multi-level marketing scheme in China, leading to shares in the company falling 12.7%.

Citron Research has been described as a killer of Chinese concept stocks. From August 2001 until now, Left has published 150 negative reports on listed companies. A majority of these companies are Chinese companies listed on the US stock market.

The research group issued a report on its website on April 26, 2011, alleging that the China-based Longtop Financial Technologies' financial reports misrepresented and overstated its financial condition and business prospects.

The report caused the company's shares to drop 12.92% on that day and 20.28% the next day.

The Securities and Exchange Commission's Division of Enforcement then charged Longtop Financial with failing to file current and accurate financial reports with the SEC, on Nov. 10, 2011.

Meanwhile, LDK Solar launched its initial public offering on New York stock exchange June 1, 2007. At the launch, LDK's market value was US$3.65 billion, while it largest shareholder and chairman Xiaofeng Peng's personal assets were worth US$2.629 billion.

When in October that year, LDK's market value had risen to US$10.3 billion and Peng's fortune grew to US$7.42 billion. This year, the company's market value fell to US$191 million, with Peng's fortune shrinking by US$7.3 billion or 98%, LDK and Peng were engulfed in debt and rumors of bankruptcy began circulating.

LDK registered losses of 1.08 billion yuan (US$170 million) in the first half of this year, while its revenues fell to 2.39 billion yuan (US$375 million). Its revenues in the same period of 2011 were 7.8 billion yuan (US$1.23 billion), a fall of 69.4% year-on-year, while its net losses were 5.5 billion yuan (US$864 million).

Money Week reported that to cut expenditure, Peng had laid off more than 5,000 employees since the beginning of this year and more than 9,000 employees over the past year.

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