Salient to Investors:
Jonathan Weil writes:
- China is a kleptocracy run by, and for the benefit of, the Communist Party elite, who have allowed securities fraud to flourish, and routinely obstructed overseas regulators’ investigations.
- Tiny research firm Muddy Waters has done more to expose Chinese stock scams than all of the world’s governments combined.
- Prudent investors start with the assumption that the books of every publicly traded Chinese company are cooked. The same may also be true of the world’s biggest banks.
- Rapid, debt-fueled growth attracts short sellers.
Erik Lam at Auerbach Grayson said the Zoomlion scandal is not good news for Chinese equities because it is a major Hong Kong-listed company, whereas all past accounting scandals revolved around Chinese names listed in the US.
Read the full article at http://www.bloomberg.com/news/2013-01-10/big-china-short-shows-downside-of-kleptocracy.html.