4th June 2014
Chinese IPOs listed in the US offer the potential of exponential growth and the prospect of geometric share prices flying off into the stratosphere says Damian Testi stockbroker at Walker Crips Stockbrokers.
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He says: “While US investors will be fully aware that momentum can quickly wane, with increased volatility comes unpredictable results. A shortfall in corporate governance, a lack of attainable information, weak internal controls, falsifying accounts, limited voting rights, are all possible stumbling blocks.
“Simply put the potential rewards outweigh the risks so long as due diligence and research is carried out in great detail. US investors who speculate in Chinese IPOs should consult their investment adviser if it is suitable and establish what portion of their portfolio meets the investment profile criteria.”
A sample of recent US listed Chinese IPOs
The firm points out that in the table above, an investor that purchased a 1,000 shares of VipShop Holdings for a four figure sum on listing would have a healthy six figure sum valuation in just over two years.
“The raffle ticket of investing in Chinese IPOs will always draw an appetite with that kind of prospect a feasible reality. In certain instances, there have been and will continue to be in the future, variables that bring inherent dangers to investors,” adds Testi.
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