China’s Sina Extends Stock Losses

My apologies to Nicholas Darvas who has been turning me on to the stock, but I am in GAW's court. You cannot trust the Chinese regardless. QB

Sina Corp., the owner of China’s third-most visited website and the Twitter-like Weibo service, fell for a fifth day, extending losses after the biggest decline since 2008 yesterday.
Sina slid 5.9 percent to $91.10 at 3:03 p.m. New York time, after plunging 11 percent yesterday to the lowest closing level since March 22. The MSCI China/Information Technology Index has fallen 6.3 percent this month, compared to a 2.1 percent decline on the benchmark emerging markets index, as concern that a slowdown in global growth also hurts the industry.
Allegations of accounting irregularities at some smaller Chinese companies have eroded demand for larger peers including Sina, Baidu Inc. and Inc. (SOHU), which have lost at least 17 percent of their value since the end of April, after reaching record highs that month, according to Aaron Kessler, an analyst at ThinkEquity LLC in San FranciscoLongtop Financial Technologies Ltd. (LFT), a Hong Kong-based software provider, was sued by an investor alleging the company overstated profit margins and concealed adverse facts last month.
“There’ve been some accounting concerns in the sector, also concerns of a global economic slowdown that have impacted these names,” Kessler said. “Short selling can be part of it as well.”
The SEC has revoked the registrations of eight China-based companies since December, and more than 24 firms have disclosed auditor resignations or accounting problems to the agency since March, SEC Chairman Mary Schapiro wrote in an April 27 letter.

Margin Requirements

Interactive Brokers Group Inc., the electronic market maker and securities firm, raised margin requirements to 100 percent for some Chinese stocks, because of “elevated risk concerns,” according to a statement on its website. Sina and Sohu were among more than 100 Chinese companies on the list. The increase went into effect June 6 in stages and will be completed by the end of this week, the brokerage said.
New-Wave Investment Holding Co., a shareholder of Sina in which Chief Executive Officer Charles Chao is a partner, signed an agreement with a unit of Goldman Sachs Group on June 3 for a “prepaid variable share forward sale,” according to Sina’s regulatory filing yesterday. The transaction allows Goldman to sell up to 1.25 million of Sina’s shares, the filing said.

‘Tracking to Plan’

“Sina’s core business is tracking to plan,” said Eugene Munster, an analyst at Minneapolis-based Piper Jaffray Cos., in a research note yesterday following the filing. He said he expects the company to add updates and advanced features for Sina’s Weibo, or microblogging service, in the next few months.
Munster maintains an “overweight” rating on Sina and a price target of $139, according to his report.
Investors’ short-sale interest in Sina retreated to 8.1 percent of its total outstanding shares as of June 7, from a 13- week high of 9.9 percent the previous day, according to Data Explorers, a New York-based research firm.
Short selling, or selling borrowed shares with the goal of profiting when they fall, surged to a two-year high of 10.6 percent of Sina’s total outstanding shares March 16, according to Data Explorers.
Longtop said in a May 23 statement that its Chief Financial Officer Derek Palaschuk and Deloitte Touche Tohmatsu Ltd. resigned because of “falsity of the company’s financial records in relation to cash at bank and loan balances (and possibly in sales revenue).”
To contact the reporter on this story: Belinda Cao in New York at