Thursday, July 21, 2011

How Chinese Investors Invest in China

Article The Motley Fool


It's bad everywhereIn fact, fraud is likely also a problem on Chinese exchanges. Chinese money managers we talked with during our recent research trip to the country estimated that somewhere between 20% to 40% of Chinese listed companies are misrepresenting themselves to investors in some fashion. To corroborate this point, a local audit professional revealed that it can take days for a bank in China to confirm corporate cash balances for Chinese companies, with the auditor suspicious that the bank is calling the company to ask what the balance should be.

If you read the article completely you could conclude that China listed stocks in the US have higher corporate governance than stocks listed on exchanges in China. So in China there are more frauds than in the U.S.!

So in the end it could be that many institutional investors are going to buy US-listed China stocks instead.

Maybe I am just dreaming and hoping that US-listed China stocks go higher day after's time to go to bed!

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