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Lihua International, Inc. Message Board

  • elpasojet Jan 21, 2013 11:53 AM Flag

    Latest Assessment on US listed Chinese RTO

    I think there is a 10% chance that diplomacy works and a breakthrough is reached. It won’t fail for a lack of trying by the U.S. side. However, I think that China has few incentives to reach a deal.

    I assign a 70% probability that the can is kicked down the road. Sufficient progress will be made to dodge the political firestorm. The Big Four firms will keep their registrations, and the deadline for inspections will be deferred again.

    I think there is a 20% chance that it all falls apart. The PCAOB and the SEC make no progress. The issue becomes political and widely known. Deregistration becomes the only option and it is the PCAOB that pulls the plug. That then forces the exchanges to decide how to enforce their rules that require companies to have auditors and audited financial statements in order to be listed. I expect in this scenario that the exchanges are forced to delist the companies, and the scramble to Hong Kong begins. - By Paul Gillis

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