Are China Stocks Ready to Pop?
The Harbin Electric LBO is big news for the small-cap China stock. So are China stocks ready to pop? That's the topic of this week's Global View column:
This past Monday was a throwaway day for most investors (the S&P 500 was flat), but potentially a very significant one for investors who have put money to work in China. That's because Harbin Electric (Nasdaq: HRBN), a small Chinese maker of electric motors, announced that it had received a going-private proposal at $24 per share from CEO Tianfu Yang and private equity group Baring. This news had a significant effect on Harbin Electric's stock price, with the issue popping from $20 to $25, but it also had knock-on effects across the entire universe of small, U.S.-listed Chinese companies, with more than 100 of them up 3% or more.
The reason for this is that Harbin's CEO, in showing that he won't stand for what he considers an inadequate valuation of his company, may be setting an example for the CEOs of other small, U.S.-listed Chinese companies to follow.\