About Chinese Penny Stocks

Video Transcript

"Today we're talking about Penny Stock; not just Penny Stocks but Chinese Penny Stocks. First to note of warning, in China in general it is very difficult to get reliable financial information. So you may not choose to believe the data that's presented to you by any Chinese Penny Stock Company. If you were me, I might look at it and say wonderful but if I was very interested, perhaps I would hire a forensic accountant to go back and review the data. Even if it had been published by reliable accounting firm; just don't believe it. Having said that, there can be much money made in Chinese Penny Stocks. The reason is, Chinese market has been down substantially; yet GDP growth remains in the five to six percent range, looking forward through the rest of 2009. That leaves multiples compressed; meaning there could be upside in the years ahead. Also we would expect some consolidation to occur in most industries as now it's getting to the point where it's cheaper to buy than build. Last, if you want to look in HongKong, which is much more reliable than Shanghai or other Chinese exchanges, you can certainly go on the HongKong Exchange on their website and do a screen off of that for companies priced under a dollar. Last but not least, plenty of Chinese companies have listed themselves for sale here in the United States. Go to nestex.com or maybe amex.com or maybe back to Bloomberger Reuters and do searches for cheap Chinese companies and see what comes up. For me, I probably start here in the US with companies that have dual listings or that company was going to, you know, likelihood, conform with US Accounting Regulations. I would think you would want to verify any Chinese financial data that you see; but you can have a little more comfort if they're listed here and subject to the laws within the United States or HongKong or London. Those would be the three I would take a look at. In terms of rate, China has lot of growth and offer lot of inexpensive companies. But in the corporate sector, a lot of problems. Best of luck. I'm Roger Groh with Groh Asset Management. Thank you very much for spending time with me."