A dual listing would solve most of the problems we have with U.S.-listed China stocks. As soon as such an opportunity arises it should be in the best interest for pretty much all profitable Chinese companies listed here. Especially for solving all the credibility issues.
I don't think that not paying a dividend is one of the problems in the China small caps space. It's plain and simple supply and demand that drives the stock price of growth companies and demand is severely affected by sentiment. There are other Chinese companies listed here that have outgrown their small cap status and now they trade at 50x EPS and higher, stocks like CTRP or BIDU. They don't pay a dividend, neither do some of the world's most beloved stocks as GOOG or AAPL or 99% of the renewable energy stocks. As soon as their business has somewhat matured I would expect them all to consider a dividend, though.
Those names do not share the credibility issues of our general small caps group, on the contrary demand for their shares is even at those lofty valuations much higher still and those stocks survived the market downturn into early July with only a few slight scratches.
There is a huge credibility issue in our space and demand is generally weak. Caused by many valid reasons, as scandals (FUQI, NEP, CSIQ), bad press, well-known names like Chanos and Greenberg going negative, dumb mainstream coverage a la CNBC, and questionable company decisions as massive dilution, bad communication and overall questionable deals in the dozens. And all the other reasons we've discussed here in length. Sentiment is slowly improving now, though - and when demand comes back in our sector then there is a good chance for a buying craze as we've seen last November.
Back to the first point, a possible dual listing. For most Chinese small and micro caps there is no other reason for listing their shares in the U.S. than accessing the capital markets as quickly as possible. For several reason they couldn't get listed in Shanghai or HongKong. They needed money quickly, or just needed to pay off early investors and accepted a lousy valuation (best-case scenario). Let's just ignore all those hundreds of Chinese companies who are listed for other reasons than company-specific ones. My point is that I do fully and with no exception EXPECT from every single public company that they have creating value for their shareholders high up on the first page of their agenda. If they could access the well-capitalized Chinese markets directly by approaching a dual listing, then I would expect most of them to do just that. The additional benefit would be that 90% of the shadiness that leads to fraud discussions could be put to rest in an instant.
