listen to this interview on CNBC and you will see why Wall Street is so hesitant to invest in companies like XIN. Personally, I don't like Chanos because his statements are entirely self-serving his hedge-fund. However, he represents the views of many in the investment community and has made a ton of money going short on China since 2009.
article is called "Why Chanos is short China" - links don't work but you can google it.
But Chanos has been right. Today on squawk box he made some of the following comments since
we can't put the link.
In fact, he warned that investors should not trust the data coming out of the government as well as corporations in the world's second-largest economy, charging that he "would take issue with almost any corporate accounting in China."
"It's destined to suck Western capital into the country and have it never go out," Chanos said during a "Squawk Box" interview. "You're almost in a classic emerging market roach motel, except it's a really big one in that it's very difficult to earn adequate returns for capital and get your capital back as a Western investor."
"But Chanos charges that the underlying drivers in the economy are much weaker.
The most recent trade numbers, for instance, show that the August trade surplus swelled to $26.7 billion as imports dropped, reflecting a demand slowdown internally.
"China's growth is slowing pretty quickly. That's stated GDP - you're never going to see negative GDP from China year-over-year, I don't think, not under this regime," he said. "But look at corporate profits, look what's happening on the ground. Corporate profits are imploding over there."
Let me throw more information here. Chinese regulators increase the foreign investor quota this year , hoping to attract more foreign investors in Chinese stock market. However, the new cap is not nearly filled. As a result, many Chinese officials have to go abroad to do a "road show" to attract investments.
Apparently, the lack of confidence in China's economics, transparency, and corporate governance play a big role in the current low valuation in Chinese stocks. I hope Chinese companies learn the lessen in the hard way this time. Before 2008, it is just so simple for almost any Chinese companies to have a over-subscribed IPS. Now, they have to build the confidence by themselves.