YY Inc rises on NASDAQ as US short-sellers quiet

US investor confidence in Chinese stocks is recovering, but an IPO window for Chinese firms in the US market may not open in the near future, industry analysts said Thursday, after stocks of YY Inc, the first Chinese firm to list in the US since April, closed up 6.7 percent on the NASDAQ Wednesday.

"Market sentiment is improving, as dedicated short-sellers have shown less interest in Chinese stocks and many firms accused of irregular practices have withdrawn from the US stock market," Zhong Rixin, an analyst at Beijing-based financial services information provider imeigu.com, told the Global Times Thursday.

Carson Block, founder of Muddy Waters LLC, told media Tuesday that it has gotten harder to make a profit from shorting Chinese stocks.

The average stock price of US-listed Chinese companies has dropped by 50 percent compared with the previous year, the Shanghai-based National Business Daily (NBD) reported Thursday.

Over the past two years, Muddy Waters has accused some Chinese firms of accounting fraud, causing some targets' stock prices to tumble.

However, other targets, like New Oriental Education & Technology Group and Focus Media Holding, saw their stock prices rebound after an initial plunge when their conduct was questioned.

New Oriental's shares have risen by 98 percent in total since July 19, and Focus Media's have risen over 50 percent since November 22, 2011, NBD reported.

Over 40 Chinese companies have delisted from the US stock market since October 2010, and some 20 more are preparing for privatization, according to imeigu.com.

"Now there are basically two types of Chinese firms in the US market: Those with very low stock prices and those with good performance, which are less vulnerable to short-selling," Zhong told the Global Times.

The share price of YY Inc, a Guangzhou-based social media company, climbed by 24 percent in total since its IPO on November 21. But that does not mean a window of opportunity in the US has opened or will open in the near future for Chinese IPOs, analysts said.

"Strong companies do have a chance to get listed, and we also need big companies like Alibaba Group to get listed to boost investor confidence," Feng Po, an analyst at financial consultancy China Venture, told the Global Times Thursday.

Moreover, some domestic companies who have held back for over a year may now seek ways to get listed, even if it means lowering prices, Feng noted.