Luckin mess unlikely to spawn new US sell-offs
April 10, 2020
China Daily
Financial fraud allegations against several high-profile Chinese firms are unlikely to trigger a spate of short selling in US-listed Chinese stocks, experts said on Thursday.
Luckin Coffee Inc's fraud has cast a shadow on US-listed Chinese firms. In less than a week after the Nasdaq-listed coffee chain admitted short-seller Muddy Waters' accusation of sales data fabrication, another Chinese company traded on Nasdaq, iQIYI Inc, has been accused of fraud.
A short seller report published by Wolfpack Research on Tuesday alleged that video-streaming platform iQIYI had inflated its 2019 revenue by approximately 8 billion yuan ($1.13 billion) to 13 billion yuan, or by 27 percent to 44 percent.
TAL Education Group, a New York-listed Chinese tutoring service provider, also reported inflated sales hours before Wednesday's opening bell. A routine internal audit found an employee fabricating sales of "Light Class" services, which accounted for about 3 percent to 4 percent of the firm's revenue, the company said.
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