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TheStreet Open House

Chinese-Stock Bashing Will Cost Investors: Poll

Stocks in this article: DYP DGW HRBN CCME CSKI

Yet another investor noted that in 2009, 630 U.S. companies reported 674 accounting problems requiring earnings restatement, so anyone making the case that there is inherent accounting risk in Chinese stocks is crying foul without supporting evidence.

Some investors make the case that the investment rationale for buying Chinese stocks is simple, and is in fact bolstered by the value compression that is common as a result of perceived risk relative to "trustworthy" Western companies. The Chinese stocks have low price to earnings ratios because of the market prejudice and high growth potential, and these factors make not investing in Chinese stocks a risk investors cant afford to take.

By the poll numbers, this argument found the most support. Roughly 61% of survey respondents think that the perceived lack of credibility in Chinese corporate management is nothing more than a market prejudice; a stock is a stock is a stock, regardless of nationality of management, was the majority opinion.

Approximately 39% of survey takers don't trust Chinese stocks.

Not a majority, but a significant representation of the uphill battle for Chinese stocks, nonetheless. Yet just how much of this doubting 39% represents investors who don't have the Chinese stock risk gene, versus those investors who are actively trying to drive down the value of Chinese stocks, is an argument for another day.

"It's bashers and shorters and that's just made an opportunity now to acquire a nice basket of stocks," commented one reader to TheStreet.

-- Written by Eric Rosenbaum from New York.

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