Just a quick update:
according to a China Daily article the PCAOB and CSRC met during the US-China Strategic and Economic Dialogue last month, and decided to increase their efforts to close the regulatory loopholes in accounting between the two countries.
This bodes well for the future as it should make certain frauds significantly harder to accomplish, however, I have a feeling this collaboration will also have an effect in “outing” a few more companies. It could also speed up the rate at which short sellers are issuing reports on Chinese frauds.
Overall we’re seeing a good amount of growth in the “DD-to-short” sector, I suspect based on the success of Muddy Waters and citron research in bringing down some big guns. But if the regulatory loopholes go away, and we can look forward to overall better quality filings from Chinese companies, now is the time to find the frauds early, short them, and publish your findings.
Will we be seeing a frenzy in this market now before the job likely gets much harder?
All in all exciting times ahead!