Chinese shares delisting

IPOs peak at the top and delistings peak near the bottom of market cycles. In Mainland China, tighter rules are forcing some B-shares to delist or switch to the Hong Kong market. A wave of delistings has also started in the United States.

Delisting of Focus Media just the start
The delisting plan started as a reaction to an attack on Focus Media by short-seller Muddy Waters, which accused the company of fraudulently overstating by about 50 per cent the number of screens in its digital display advertising network across the mainland.

Focus Media chief executive, Shanghai-born Jason Nanchun Jiang, "was very angry. At one point, he was seriously thinking of suing Muddy Waters", said a person close to Jiang. But he gave up on that idea, figuring the chances of winning were slim, and embraced a buyout.

..."You cannot always look at things from a very American perspective and I think this has been a problem for US investors, not just in the case of Focus Media but also for many other Chinese companies listed in the US," the person added.

For example, some US investors and analysts believe American investors can't see Focus Media's attraction because they aren't familiar with the kind of captive audience that the company's display ads -located in office buildings, often near lifts - play to.
I think the bigger issue is that it is very difficult to obtain information from China, so stock prices are much more a reflection of social mood: when times are good, people are optimistic and believe the hype. When times are bad, they are pessimistic and assume the worst. That's not to say investors don't behave similarly when they have information, but in the case of companies accused of fraud, it's very hard to find the type of value investors who will put a floor on the stock (as is happening now with Greek shipping companies). Chinese shares are also performing poorly in Hong Kong and Mainland China, thus the excuse of an American perspective is bogus. This is 70% social mood and 30% CCP-run China's lack of information.

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