China reverse mergers...reply to private message.....
Reply to the person who sent me a private message about RNPR/YIHG and China RMs in general.....
Regarding RNPR/YIHG: I would say if you are at all uncomfortable holding a position in this stock, you should be able to find buyers for your position in the 5-15 cent area. No sense in holding onto something you seem to regret buying.
This past year has not been particularly kind to reverse mergers (and most stocks, for that matter), regardless of whether they are China RMs or completely domestic companies in nature. Stagnant or sub-par performance is not a trait exclusive to China RMs in today's stock market.
I happen to like the "niche" type of play that YIHG currently represents (pastry/snack food consumption in China). Up to this point, I am pleased with how the CEO has handled the RM. Her background is impressive, and the reverse merger is structured in a manner that is conducive to upside for the retail investor.
Regarding China reverse mergers in general: There is no question that a negative atmosphere surrounds China stocks, and anyone investing in these particular stocks should be aware and accepting of the risks and general sentiment. But sometimes sentiment/conditions can change in the market (often seen only in hindsight), and some interesting opportunities might arise.
While there are a lot of people talking disparagingly about China-related stocks right now (and in many cases, justifiably so), I think people are making a mistake if they believe this is just a problem exclusive to US-listed China RMs or China IPOs. There is a legitimate chance that prominent US-based multinational companies trading on the upper exchanges here in America could find themselves under attack from shorts and facing possible delisting if things continue to escalate.
Basically the tactics and avenues of attacks that shorts are using to bring down the US-listed China stocks are forming a "template" that could very easily be applied toward attacks on companies like Microsoft, General Electric, etc, etc. Any company that has operations in China is at pretty serious risk here, regardless of whether their accounting/operations in China are completely free of fraud.
The pressure is intensifying on the SEC to reach an agreement with China that would allow PCAOB (Public Company Accounting Oversight Board) inspections of Chinese audit firms. Anything less than full/complete inspections and full/complete compliance with SEC requests is something that could play directly into the shorts' hands. I think it was one of Forbes columnists/bloggers that made the point this past year that (and I paraphrase here) the SEC knows that Microsoft would not be able to comply with a request to see all documents/information related to the audit of its China operations because the company doesn't have them and the audit firm will not provide them.
Senator Charles Schumer (via the letter he sent to the PCAOB a few weeks ago) is basically demanding that the PCAOB immediately terminate the registration of any China audit firm that refuses to comply with an inspection request. If that were to happen, all of these US-based multinationals would be unable to consolidate their China operations. Which would result in these companies being unable to comply with the audit requirements of the NYSE/NASDAQ exchanges.
