US-listed Chinese companies and their investors are in panic mode. Thanks to accounting fraud, auditors quitting, short attacks and scandals like Longtop and Sino-Forest, investor confidence has been all but destroyed in recent months.
A new CCG Investor Relations survey of investors in US-listed Chinese companies finds that only 2 per cent declare themselves ‘very satisfied’ with the disclosure and governance practices of the companies in their portfolios.
That dismal 2 per cent figure is one trigger behind a webinar on Tuesday, October 11 at 9.00 am China time (Monday, October 10, 9.00 pm EDT), moderated by your correspondent.
With a focus on the crisis of confidence in Chinese equities and ways to rebuild it, CCG’s president, Crocker Coulson, will unveil the rest of his eye-opening new survey: what factors are important when investing in Chinese equities, what risks most concern investors (financial fraud heads that list), what positive steps management can take (upgrade to a ‘big four’ auditor for a start), and how IR can make a difference.
The webinar is designed for CEOs, CFOs and IROs at Chinese companies listed outside China, as well as their investors and advisers. Coulson has rounded up three other panelists, each occupying a different corner of the Chinese investment arena:
– Garrett D’Alessandro, CEO and CIO of Rochdale Investment Management, is one of the few fund managers still buying Chinese stocks in 2011. On the back of deep-dive due diligence, Rochdale has been looking for companies that aren’t frauds but are still trading at rock-bottom multiples.
– Alexander Potter, senior research analyst for Piper Jaffray, covers Chinese industrials and automotives listed in both Hong Kong and the US, giving him a broader perspective than most sell-side analysts focused on China, and some of his companies have faced short attacks. He is a big advocate of channel-checks – going out to interview dozens of truck drivers, for example.
– Dan David, founder of GeoInvesting, was one of the first investors to go bearish on Chinese micro-caps about 18 months ago. Philadelphia-based GeoInvesting’s researchers dig up contracts and other documents, videotape facilities and interview customers. That approach has yielded dramatic results – like uncovering fraud at Yuhe International, a chicken farming company.
For more information on the webinar, or to view the slide presentation on the day of the webinar, please go to www.ccgirasia.com/events.
[Article by Neil Stewart, Inside Investor Relations]