Chinese stocks this week have gone bonkers, in most cases to the point that goes beyond sensible. When stocks rise exponentially and with a major wave you always have to back over the reasoning with a fine tooth comb.
We just saw Xinhua Finance Media Limited (NASDAQ:XFML) make a mystery run of 6% before giving back some gains, and no doubt it was the China Syndrome helped it. This company is one we’ve covered on and off and it is up roughly 80% from its post-IPO lows. The stock was punished severely shortly after coming public due to lurking issues that weren’t properly disclosed ahead of the IPO. It’s too bad that this turned into a busted IPO so fast, because the company may have alienated many investors who would have otherwise been quite interested.
Xinhua actually has a lot going for it. It brought in more outside independence after Yucaipa bought shares from selling shareholders into a lock-up expiration. It has actually been able to stage a defense after much negative outside media coverage (imagine news agencies bashing each other). The company has been making deals and now is much more than just a "Chinese Finance Media Company." It has too many distribution partners and now research to mention in a quick article.
These moves in Chinese stocks this week have been baffling. There isno way to know if traders will continue running these up or if theywill send them back down to valuations that make at least some sort ofsense. But if the Chinese stock hype is real and can maintaininterest, and we emphasize that as an "IF," then this one at leastdeserves to be revisited for further research after having such abattered IPO.
Other China Issues:
- China Digital TV Ramps IPO;
- Some of these have run fivefold;
- Baidu.com defying logic;
- e-Future came tumbling back down;
- China Natural Resources up almost another $20 after a 75% one day gain.
Jon C. Ogg
October 5, 2007