China’s Reverse Merger Stocks

chinese reverse merger Chinese Reverse MergerAs you may have read, in our Xinde Technology (WTFS.OB) entry, Chinese reverse merger stocks are heavily in the eye of the news. Many of them are heavily shorted based on questionable financials, sector sentiment, market conditions etc.

Chinese companies have recently taken advantage that allows companies to be listed without actually doing an IPO. Instead, they buy a publicly traded shell company, takeover the board and install their own management team. The Chinese reverse merger has also proved to be a faster, less expensive way to go public.

In the past reverse mergers have traditionally been executed by penny stocks. Now, the game has changed,as we see them being done even on the NYSE. Right now, there are almost 100 Chinese companies that have gained listings on the NYSE, AMEX and NASDAQ through this listing process. As many of our readers know, we often write entries that are geared towards giving our readers the edge that they need in trading, and even some astute, experienced traders are unaware of which Chinese stocks actually are reverse merger plays. So we are providing a list of the stocks and symbols on the NYSE and AMEX below. Hopefully this piece saves you some time.

Chinese Reverse Merger Plays

American Lorain ALN
Aoxing Pharmaceutical AXN
China Armco Metals CNAM
China Botanic Pharmaceutical CBP
China GengSheng Minerals CHGS
China Marine Food Group CMFO
China North East Petroleum NEP
China Northfruit Group CNGL
China Pharma Holdings CPHI
China Shen Zhou Mining SHZ
China Shenghou Pharmaceutical KUN
Ever-Glory International EVK
Feihe International ADY
General Steel Holdings GSI
Longwei Petroleum Investment LPH
New Energy Systems Group NEWN
NIVS Intellimedia Technology NIV
Orient Paper ONP
Orsus Xelent Technologies ORS
Puda Coal PUDA
Sinohub SIHI
Tianyin Pharmaceutical TPI
Tiens Biotech TBV

Check back for more penny stock news, IPO updates and stock market research.

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Japan Penny Stocks – Japanese Economy Shakin’ by Quake

Monday was a prime example of why both long term investors and traders need lists of stocks. Most Japanese ADR’s which trade on the NYSE traded higher today based on the eased sentiment from the nuclear crisis. Smart money came in to these Japanese ADR’s and ETF’s late on Friday buying weakness and figuring the situation wouldn’t get much worse.

japan Japanese EconomyDespite the Nikkei being closed today stocks like Nomura (NMR:NYSE), Sony (SNE:NYSE), Toyota Motor (TM:NYSE) and Hitachi (HIT:NYSE) all closed up over 2 percent today. Even Honda Motor, which was a favorite short selling play last week ,rallied over 1.3 percent.

Is this a relief rally ? Maybe. Can this new bullish sentiment change tomorrow ? Yes. However, if the situation changes for the better in Japan, the bottom line is that investors bought some cheap stock in the past few sessions. Remember, even the best penny stocks to buy have down days, even if they were rising stocks the week or month before. The reason for the prior hot penny stocks analogy is to point out that the Japanese economy is and will still be volatile in the near future.

For now a good approach to investing in Japanese ADR’s is to have the foresight and liquidity to stay in. Scaling into positions with the intention of averaging down is something that both large cap and penny stock traders do every day. For instance, if you like Toyota’s stock price and long term prosects may warrant a purchase while the stock is in the low to mid eighties. So why wouldn’t you buy more if it dipped to the high seventies if fundamentals and nuclear situation didn’t change for the worse.

While there is risk in Japan, there is much more liquidity in these names than in many high fliers mentioned on CNBC and much more than most penny stocks. So once again, prepare your list of stocks. There are several other quality Japanese companies aside from those mentioned above. Remember, many of these fallen angels were rising stocks that many institutions wanted to own just a few weeks ago. So now just might be the chance to “buy the dip and sell the rip”. Stocks on the rise are out there every day, you just have to work to find them.

Keep an eye on this adr list of Japanese stocks.


China’s Real Estate Bubble

china stocks 300x225 Will China Slow Down the US?Chinese stocks fell last night to the tune of slightly less than 3%. At this point many think that the world’s third largest economy may finally be ready to roll over. There have been many opinions on China eventually having a real estate bubble. Others feel their demand for commodities will fall. In theory this shouldn’t bode well for world markets, and especially the NYSE and NASDAQ.

However, we have all heard this boom bust story regarding China before. Investors may see not hot penny stocks like returns in Chinese stocks, but history has shown us that it’s usually near the bottom when the media is calling for a crash. We are not saying to take a contrarian attitude and go long Chinese equities, but take the bad news with a grain of salt.

The main concern with China in regard to U.S. stocks has to do with inflation. China’s inflationary fears certainly impact the FOMC’s policy making. Our markets have seen this situation before and Bernanke has pulled us through.

Now how does this impact the OTCBB ? Well, you can look at it two ways. First, the negative sentiment coming out of China will make it difficult for massive short term gains in Chinese Bulletin stocks that trade on the Pink Sheets or Bulletin Board. Penny stock traders often look for momentum and any type of breakout or rally might rare these days with the current news flow out of Beijing.

The second way to look a China from a OTCBB standpoint is a positive one, and it’s a longer term view. Many Chinese stocks trading in the United States are at or near lows. Does this create a buying opportunity ? Maybe. For instance former high fliers like Amico Games Corp. (AMCG.OB) and China Infrastructure Investment (CIIC.OB) are at their lows. We are by no means recommending these two names, but we are pointing out that value may exist in Chinese microcaps. So start forming a penny stock list made of China plays and research them. Odds are that most are at lows and a buy low sell high opportunity might be there. After your list is formed, monitor the Asian markets. If a turn is near, value buyers may take a chance in Chinese large caps and it may trickle down to the OTCBB. Once again, don’t jump in immediately, but be ready and prepared.


Small Caps Will Lead The Way Before Blue Chips Do!

The demand for foreign-made cars, computers and clothing widened the U.S. trade deficit for the month of May.  This is the highest level in 18 months.

The trade deficit increased 4.8% to $42.3 billion.  This is the largest imbalance since November of 2008. American exports of goods and services rose 2.4% while imports rose 2.9% and outpaced them by .5%.

global trade Penny Stocks Double In Any Market ConditionAmerican manufacturing has been outperforming other industries and benefiting from a global economic recovery. But the concern is that export sales will be hurt by the European debt crisis.  The Dow collapsed when Greece was downgraded but yet it held up strongly against the Portugal downgrade.

Through May, the U.S. trade deficit is running at an annual rate of $474.8 billion, up by 26.6% from the 2009 deficit of $374.9 billion. That was the lowest annual trade gap since 2001.  Ironically the country was in a recession as well that year.

The rise in the May deficit came even though oil imports had dropped by 9.1% to $27.6 billion.  We saw both the price of oil and the volume of shipments decline.

The deficit with China rose to $22.3 billion.  This is a 15.4% spike from the April deficit. So far this year, the U.S. deficit with China, the largest imbalance with any individual country, is up 10.2% from the same period a year ago.  Many bankers and currency traders feel that the Chinese Yuan is grossly undervalued by almost 50%.

How does this affect small caps and penny stocks?  There is no set formula to the markets.  You often hear that when gold is up, the dollar is down or the market is down gold is up etc.  This is not always the case.  Let’s take your typical investor.  He may have purchased a few hundred shares of British Petroleum (BP) for his retirement account.  In the meantime he may have a few thousand dollars of speculative money that he is willing to risk on a speculative investment such as  hot penny stocks.  He is more inclined to sink that money in penny stocks if his investment in BP is doing well.  The whole Dow got crushed until recently and people who thought their money was safe in Blue Chip companies were severely damaged.  Multiply this by millions of people and we have a dilemma.  This takes away from speculative investments.

The general rule of thumb is that small caps lead the blue chips out of recession by a year.  Who knows if that rule will hold true.  The fact is that you can always find a penny stock that has doubled in a day…. The trick is finding it before it has doubled.