Tags: China | buyout | stock | soar

Chinese Buyouts Raise Concern as Stocks Soar Days Before Offers

Tuesday, 11 February 2014 07:25 PM

AutoNavi Holdings Ltd. became the second Chinese company in two weeks to see its shares surge in the days leading up to a takeover announcement, raising concern among investors that details of transactions are being leaked.

American depositary receipts of AutoNavi, an online map-content provider, jumped 13 percent Feb. 6 and Feb. 7, the most among the biggest Chinese stock traded in New York, before Alibaba Group Holding Ltd. offered to buy the shares this week. Shanda Games Ltd., an operator of online games, soared 34 percent in the seven days prior to saying on Jan. 27 that it plans to take its company private.

The pre-buyout rallies add to investor concerns that the market for Chinese shares trading in the U.S. lacks transparency as short sellers including Carson Block say companies are overstating earnings while U.S. regulators bar accounting firms from conducting audits in the Asian nation. At least 35 Chinese companies have announced buyout deals to withdraw their U.S. listings since early 2011 in part because those concerns depressed their stock valuations.

These stock gains create “distrust within the markets,” Timothy Ghriskey, chief investment officer at New York-based Solaris Group LLC, which manages about $1.5 billion in assets, said in a phone interview. “It doesn’t generally bode well for markets where that occurs regularly.”

John Nester, a spokesman for the SEC, declined to comment in an e-mail yesterday. E-mails to AutoNavi’s external public relation managers at Ogilvy Financial seeking comment weren’t immediately returned, and Alibaba’s Hong Kong-based spokesman John Spelich didn’t respond to an e-mail.

Equity Index

Tip Fleming, a spokesman for Shanda Games, declined to comment on the stock gains when contacted by Bloomberg News on Jan. 28. He didn’t reply to messages sent yesterday seeking additional comment. A call and e-mail to Nancy Condon, a spokeswoman for the Financial Industry Regulatory Authority, weren’t immediately returned.

While concern about Chinese companies in New York mounted over the past four years, the Bloomberg China-US Equity Index has gained 42 percent, outperforming the benchmark equity gauge in Shanghai, which slumped 13 percent in dollar terms.

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AutoNavi Holdings Ltd. became the second Chinese company in two weeks to see its shares surge in the days leading up to a takeover announcement, raising concern among investors that details of transactions are being leaked.
China,buyout,stock,soar
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2014-25-11
Tuesday, 11 February 2014 07:25 PM
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