This started before MWThe weakeness in the sp before the MW report was also due to accounting questions that were swirling through the hedge fund community. Many hedge funds were already shorting, before MW came out. There was a great deal of smoke here, well beforehand. There were lots of people in on this.
I have little doubt that was a group or hedge fund inner cirlce or whatever that was aawre MW was going after them, over the past several weeks.
I did not happen to be in Sino, but I do hold GLG, TRIT, and ABC, all of which have been dropping as the Chinese small cap fireworks show has carried on for the past couple of months. I jumped out of DEER just days before it tanked.
It is my guess that the new normal for chinese companies will be a need to validate their assets, contracts and operations, though photos, conferences, tours, video, validation from customers of orders and contracts, etc. Whatever they can come up with, basically.
Providing evidence that they are "real" will become just a part of regular marketing and IR, as there will be little other choice. That is the environment they now operate in.
Until the Chinese allow western accounting forms to actially go in and audit directly on site, instead of accepting what the local subvsidiaries feed theem, we won't get anyhere. Structural lack of transparency, plus the mythical chinese middle class growth story has been the combination that has caused all this, a giant systematic bilking scheme.
As for Sino, we'll see. The arguments are obvious for either side: Sino is long established and appeared credible. Muddy Waters, people would just love to dismiss them as shady little manipulators, but they have been right before. No one really knows at this point.
When it's over, regardless of the outcome, if you say "told ya", you are full of crap. You won a 50/50 coin toss. Thats all. You didn't know anything whatsoever.
However, if Sino wins, that will severly damage MW credibility, and lift sentiment for Chinese stocks. That could be good and bad, as MW has actually been useful, alerting investors to what is really going on over there in general, and blowing up some nasty scams. And there are many more scams out there, we all know it.
If MW wins, they will be the most powerful name in investing. After that, as soon as it is known that they are after a company, it will be 100% over for their shares that day. Again, good and bad, as then no one will be trusted, good won't be recognizable from bad, and the China story will be out the window. It may force a lot of change in the end though.
If this carries on too long, the systematic pattern will soon have people questioning Chinese GDP numbers, and viewing the whole thing as a conspiracy from top to bottom against the west.
There is a whole lot on the go here. Regardless, a lot needs to change, that is very clear.