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Investor Interest Returns to Chinese Companies Traded in the U.S.

Posted on July 8, 2011 by Jeffrey Friedland

Yesterday could be seen as a turning point for smaller cap Chinese companies whose shares trade in the United States.  The two biggest gainers on Nasdaq were two Chinese companies, China Auto Logistics Inc. (CALI), and ChinaNet Online Holdings Inc. (CNET).

The huge increase in the shares of these two Chinese companies is very significant.  With much of the bad press regarding auditing issues of Chinese companies, the fact that the two biggest gainers on Nasdaq were Chinese companies is very significant. It shows that American investors are realizing that they can no longer ignore owning shares of Chinese companies, especially as the American and European debt crisis continues, and the U.S. remains mired in an economic quagmire.  It is also an affirmation by American investors that there are “good Chinese companies” that are traded in the U.S.

The shares of China Auto Logistic (CALI) increased over 78% yesterday. Approximately 2.2 million shares changed hands, a 11,186 percent increase over the company’s 65 day average volume. The shares rose $.91 or 78.4 percent to $2.07. This morning China Auto Logistic’s shares are up an additional 2.78%.

Yesterday’s price move took place after the company announced the closing on July 1st of a private placement that resulted in the company selling shares at a 50% premium over the share price at the time of the closing.  The private placement consisted of three million shares at a price of $1.75 per share and raised $5.25 million.

In announcing the private placement, Tong Shiping, the CEO and Chairman of China Auto Logistic indicted that the private placement investors in purchasing the shares above market, clearly appreciate the strength and growth potential of our company, which has been masked by the unprecedented current predicament of Chinese stocks in the U.S. The full year sales advance in 2010 above 32%, as I had said repeatedly, was unsustainable. Nevertheless, I believe we will continue to see very healthy, world leading double digit sales in 2011 and beyond, following year-over-year growth through the first five months this year of about 4.2%, nearly 7% growth in passenger car sales, and continuing double digit growth in luxury sales.”

Yesterday, the shares of ChinaNet Online Holdings Inc. (CNET) increased over $1 to $2.60 yesterday, an increase of almost 64%. Over 345,000 shares were traded, an increase of almost 1200 percent over the company’s 65 day average volume.  This morning the shares are up an additional 3.5% to $2.69. There was no company news announcement yesterday by ChinaNet Online Holdings that could account for the huge volume and a huge increase in price, so the reason for the huge increase in price and increased volume is unclear.

Author:  Jeffrey Friedland