Soft landing expected for China stocks - William Bao Bean

William Bao Bean

The fairy tales of sky-high valuations for China internet companies at exchanges in the US seem over, yet again. Financial analyst and VC William Bao Bean expects a return to realistic valuations, in a soft landing, he tells The Australian.

The Australian:

Shares of online bookseller E-Commerce China Dangdang, which surged 87 per cent on their New York Stock Exchange debut in December and peaked even higher in January, fell below their IPO price for the first time last week.

Renren's shares jumped 29 per cent on their debut a month ago but sank back below their IPO price of $US14 the next week, and were trading at $US7.90 in New York.

And Baidu's shares have fallen 20 per cent from a closing peak seven weeks ago, wiping out about $US10.7 billion in market value .

In roughly the same period, the Nasdaq Composite index has fallen 7.6 per cent from a closing peak in late April and China's benchmark stock index has fallen 11.5 per cent from a closing peak that month.

"There are fewer and fewer and fewer reasons to expect any increase in the stock prices - there are fewer positive catalysts, and investors are looking for reasons to sell," said William Bao Bean, managing director of investment at SingTel Innov8, a venture-capital unit of Singapore Telecommunications.

"I think what you'll see is a gradual deflation. The stocks have to grow into their valuations."

More on the China Internet bubble in The Australian.

William Bao Bean is a speaker at the China Speakers Bureau. When you need him at your meeting of conference, do get in touch.

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Not _all_ listed Chinese companies are bad - Shaun Rein

Shaun Rein

Long term China bull Shaun Rein warns against buying into listed Chinese companies, since in many cases they offer a receipt for trouble, he argues in CNBC. Not all NASDAQ listed Chinese companies are bad, but investors have to be very cautious.

Almost all suspended NASDAQ stocks belong to Chinese firms, Rein notes, and he sets some ground rules:

Another rule to follow is to be wary of firms that list in the US first because they did not qualify to go public on the mainland. Internet and social media companies Ren Ren[RENN 12.60   -0.56  (-4.26%)   ], Youku [YOKU  44.49   -4.05  (-8.34%)   ] and Dang Dang[DANG  19.95   -1.01  (-4.82%)   ] recently listed on the New York Stock Exchange, but would not have been allowed to list on the mainland because they don’t have enough profits. Companies need three years of profits before they can go public on the mainland China exchanges. In the US, you do not need to show profits in order to go public. Most senior executives have told me they would rather list in China if they could because they expect the yuan to appreciate.

Also be careful of boutique banks, investor relation firms and accounting companies, called middlemen firms, which are responsible for taking companies public and for pumping up stock prices.

More in CNBC.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Do not invest in Dangdang and Youku - Shaun Rein

Shaun Rein by Fantake via Flickr

US investors should be very cautious spending their money on Chinese companies like bookseller Dangdang or video hosting company Youku who have no clear business model or otherwise a hard time to show a profit, warns Shaun Rein in this debate on CNBC.
While China's economy has been doing pretty well, especially Chinese companies who list in the US, because they do not qualify to list in China itself, should not be touched.

Commercial
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference, do get in touch.

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• China brands suffer from 'made in China' stigma - Shaun Rein (chinaherald.net)
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• Chinese Internet IPOs: The Case for DangDang Over Youko (dailyfinance.com)