Quote from newguy05:
Cash rich chinese companies buy up failing american companies that are public listed in the US, and they become instantly listed on the exchange bypassing all the paperwork required to file IPO. Then they can tell their customers and put on their website that they are a public traded company in the US, increasing its credibility.
Same goes for listing on the chinese/shanghai stock exchange, there is no fail stocks there because the # of companies want to be listed far exceeds the government allowed limit. So as soon as a public traded company is not doing well/failing, you will have a dozen suitors in tow trying to buy it, they will throw cash and pay above market price per share just to become publicly listed, that alone is more valuable than many of the listed companies themselves.
In term of fundamentals and balance sheet, they are all cooked, there is no concept over there. You trade purely based on momentum. I am sure some of the largest ones like bidu etc..may have proper bookkeeping, but most are all bullshit.
I remember years back buying into this company (ticker ffhl), thought i found a hidden gem, checked its balance sheet, made sure it has its own working factories, made physical in demand goods (some sort of high tech film materials used by many), even got a few guys to visit their plant to make sure everything is legit. But nope, it turned out to be a complete fraud, all the books were bad. Stock went above $25 if i remember correctly, then everyone realized what's going on with the financials, the volume completely dried up and the stock went to $1, i was too stubborn to sell at the time, lost about $40k. After that, the only chinese stock i buy is on the shanghai stock exchange and mostly sp500-type indices.
Becareful.
