We don’t like the smell

Article Excerpt

We’ve long said that the fast-growing Chinese economy holds a lot of investor promise. But we’ve also cautioned that you need to be aware of the risks of investing in Chinese stocks. One major risk is that it can be hard to get accurate information on Chinese stocks. So if you have any doubts about the integrity of that information, you should get out. For example, we recommended selling Sino-Forest $4.59, symbol TRE on Toronto, in early 2004 after it gained 100% for us in just three months. That’s because we developed qualms about the quality of information that it was supplying to investors. In a recent article, China Economic Review says it believes Zhongpin Inc. $8.64, symbol HOGS on Nasdaq, has overstated its sales and the number of stores it operates. Zhongpin denies the allegations, and stands by its filings with securities regulators. Zhongpin’s shares could stagnate until the situation is resolved. But that could take months, even years. Meanwhile, we see better…