Confessions of an S-Chip Boss

The risks of investing in S-chips.
Risk points include:
-Many of them were leveraged to the hilt, borrowing from mainland banks to punt the Chinese stock market and property market in the mistaken belief that they would have no problems repaying their loans as they were sitting on huge paper gains on their investment holdings.

- usually have a holding company that is registered as a shell company incorporated in a tax haven such as Bermuda or the Cayman Islands which do not have robust company laws in place to protect investors’ interests

- game could have continued if not for the subprime crisis crashing the markets and un-ravelling their game.
- similar to subprime crisis in US.

So as we are chasing bulls, we need to be aware of the hyenas.
Buyers must be beware of pump and dump by insiders.

Orginal article

Posted in: Stocks