Now might be the time to look closer at Chinese small caps. So many "seem" to have low p/e's, growing sales, high roe's, And are selling near 12-mo lows.
Consider me a contrary indicator.
I've decided to reduce my exposure to these companies, and have closed about 1/2 of my 18 or so positions. I'll try to stick with the stocks that seem to be working out okay or that I have some confidence in. Several have provided me with unexpected surprises, and issues which I don't seem to see in other developing or undeveloped countries. One surprise (several instances) is, issuance of stock below market value when the company already is cash-rich and almost debt-free. A second is the issue of independence/competence of auditing firms -- I reviewed several of my holdings, and there's none to which I can point and say, "I have good confidence in this firm".
Today I find myself with a losing position in China's [t]CSKI[/t] (<span style='font-size:11px'>LAST</span>: 6.67<span style='font-size:11px'> 9/7/2010 7:37:50 PM</span>) , If I understand correctly, several of CSKI's distributors no longer want to do business with CSKI. So CSKI is projecting much lower sales in upcoming quarter(s). Result: stock has tanked.
Apparently because CSKI reports its results to the SEC, and so it's sales are public info., the distributors are afraid the Chinese government will be able to ascertain the distributors' actual sales, and so tax them (the distributors) accordingly. (And/or punish them for lying to the State).
Seems like one surprising issue after another with these small Chinese microcaps. Doesn't seem worth it to me to hold on to losing positions here. |
