by Niu Hairong
NEW YORK, June 23 (Xinhua) -- Chinese companies listed in the U.S. stock market may have valuation pressure, but the door is not closed, Scott Cutler, executive vice president and co-head of U.S. Listings and Cash Execution at NYSE Euronext, told Xinhua in an interview.
The past month was one of the darkest for many U.S.-listed Chinese companies. With the number of fraud accusations increasing, many companies saw their stock prices plunging and market value evaporating overnight. Investors suddenly seemed to want to dump all stocks labeled with "China," which they greatly favored just a few months ago.
"Unfortunately, mistakes of a few have taken the opportunities of many in China," Cutler told Xinhua. "The big challenge the market has right now is a crisis of confidence in the truthfulness of many Chinese firms and accounting practices. Unfortunately, there have been now numerous sentences of fraud, shaking investors' confidence in even those companies that may be operating without fraud."
Although the problems are confined to a small number of companies, the ripple effect hurt Chinese companies as a whole.
"Hopefully regulators and the authorities crack down on the example of those individuals and send them to jail. That may prevent others from even thinking about it," Cutler said.
Some people blamed short sellers for the current confidence crisis, who apparently have made a huge amount of money from the fall of Chinese companies.
"Yes, short sellers are those people who take a negative view on stocks, certainly (they) have an impact, but the short sellers have every right to take a negative view on the market. That's how markets operate," Cutler said.
However, Cutler agreed that there could be firms that take advantage of that situation. "My guess is that in those particular situations, where somebody comes out with a false statement, that too is illegal, that too is fraud, that too should be punished," he said.
"I think the biggest challenge for those companies that are not operating in a fraud is the classic how-to-prove-the-negative, which is how do you prove that you are not being fraudulent."