Shares of Longtop Financial Technologies Ltd. (NYSE:LFT) fell by as much as 18% on Tuesday, then dropped nearly 30% today, following a report by Citron Research which bluntly stated that “every financial statement from its IPO to this date is fraudulent.”
Citron is the same group that recently outed China Media Express and China Biotics as frauds ; they were eventually de-listed from the Nasdaq exchange.
Longtop Financial joins this growing list of companies based in China or Hong Kong that forensic analysts are accusing of fraud. Many of these companies were Chinese firms using reverse mergers with American shell companies to gain access to US markets – thus, allowing them to evade the scrutiny of the IPO process.
However before the research report became public knowledge, Longtop was well on its way to woefully under performing Chinese standouts like Sohu.com (NASDAQ:SOHU) and SINA Corp (NASDAQ:SINA).
Therefore traders who may have missed the Longtop short, should be on the lookout for the next big short. Below is a watchlist of Chinese stocks with market cap above 500 million and below 5 billion that investors appear to be shying away from in the wake of the growing Chinese reverse merger scandal.
Disclaimer: T3Live is not claiming these stocks are frauds, this is simply a watchlist of companies that appear to be fitting the profile from a technical analysis standpoint based strictly on market cap, country location and under performance over the last 12 months. Companies listed by 1-year performance.
CNinsure Inc. | NASDAQ:CISG | 1-year perf.: -39.88%
Sector: Financial | Industry: Insurance Brokers | Country: China | Market Cap.: 755.24M
Longtop Financial Technologies Limited | NYSE:LFT | 1-year perf.: -38.14%
Sector: Technology | Industry:Business Software & Services | Country: Hong Kong | Market Cap.: 1.27B
AsiaInfo-Linkage, Inc. | NASDAQ:ASIA | 1-year perf.: -34.83%
Sector: Technology | Industry: Security Software & Services | Country: China | Market Cap.: 1.46B
Mindray Medical International Ltd | NYSE:MR | 1-year perf.: -28.94%
Sector: Healthcare | Industry: Medical Instruments & Supplies | Country: China | Market Cap.: 3.10B
Perfect World Co., Ltd. | NASDAQ:PWRD | 1-year perf.: -23.92%
Sector: Technology | Industry: Application Software | Country: China | Market Cap.: 1.30B
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| Based on performance over the last 250 trading days. |
E-House (China) Holdings Limited | NYSE:EJ | 1-year perf.: -19.61%
Sector: Financial | Industry: Property Management | Country: China | Market Cap.: 1.02B
Harbin Electric, Inc. | NASDAQ:HRBN | 1-year perf.: -17.32%
Sector: Industrial Goods | Industry: Industrial Electrical Equipment | Country: China | Market Cap.: 581.88M
WuXi PharmaTech (Cayman) Inc. | NYSE:WX | 1-year perf.: -9.54%
Sector: Healthcare | Industry: Drug Manufacturers – Major | Country: China | Market Cap.: 1.23B
Yingli Green Energy Hold. Co. Ltd. | NYSE:YGE | 1-year perf.: -5.82%
Sector: Technology | Industry: Semiconductor – Integrated Circuits | Country: China | Market Cap.: 1.73B
*DISCLOSURE: None
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