RE: Chinese company fraud, Sino bankruptcy HF.TO had 2 board members with Agrium on it as well and that didn't really help in the end did it? Agrium still didn't pull out their large percentage of investment but their board member is out. Just because you have another big investor to buy a membership on the board doesn't mean a sky rocketing share price or a reassurance of the share price won't go lower.
The odds are very highly for the price to drop in the short term given the following:
- The peak of the S&P and NASDAQ in which reflects the sentiments of institutional investors which accounts near all the volume we see in these Chinese stocks. As these instituional investors cut back on trading, MGO is all the more vulnerable to such withdrawal as we see in relation of MGO to both S&P, TSX and NASDAQ indecies. All during the pullback MGO was affectly taken to those lower levels. With already low levels, a subsequent withdraw will cause the price in the near future to decrease further.
- The relationship and stigma associated with Sino-Forest that has brought most Chinese share prices down. Not to mention the extreme negative news of bankruptcy from the alleged fraud Chinese company Sino-Forest that hasn't been priced in which was announced on Saturday.
-The technical perspective indicators of these company's to unable to break the long term resistence level and fail to make a higher low.
-Fundamentals doesn't really matter as long as the volume of investor, mainly traders from instituions, doesn't see the short term signals to buy anymore shares. The short term indications is a time to sell more shares before it gets lower. Right now the risk and return does not look good.
Not everyone who invest are in it for the long term. Those who are should take their money elsewhere to find a better company with a better return. These company's are such garbage that should be tossed out of one's portfolio. The only people who should hold on the extreme downside of these stocks are the instiutions that are involve in improving the company over a period of many years. They will simply buy more given the lower price and lower share prices doesn't really affect their bottom line.
Remember these company's went IPO at near 300% of current level prices and they have already capitalized on the gain. It makes little difference if their share prices go up. If they are able to improve the company, they simply do themselves a favour and they are in no hurry.
Those of us who invest for a bit extra money aside of our regular jobs shouldn' waste time and effort on this garbage company. I don't short this stock as you can imagine how many shares you have to short inorder to make a decent return. With this type of volume, no one in their right mind will short this stock. Plus IIROC provision of shorting this stock is still not met so therefore you can't short this stock. Especially when I am not an institution and definitely don't have the means to do so.