China Minzhong: What could happen and what to do?

I received an SMS from a friend that CIMB and Lim & Tan ceased coverage of China Minzhong. I responded by saying that maybe I should do it too. Seems like an easy way out of the mess. If analysts who are paid to do what they do are jumping ship, shouldn't an amateur investor and part time blogger do the same?

On a more serious note, with this event following so closely another event which recently affected a few readers, I am thinking more deeply about the future direction of my blog. ASSI today is not the ASSI from almost four years ago, after all. Blogging is meant to be an enjoyable past time for me but with the rising popularity of my blog, naturally, there will be greater expectations and, with this, greater responsibility, whether I want it or not.

It should not come as a surprise that I have been thinking quite a bit about China Minzhong since yesterday. However, it might come as a surprise that I am not too affected by the possibility of a total loss if all allegations by Glaucus Research were proven true in due course.

I am more affected by the possibility that some readers might have followed my moves to buy into China Minzhong when I did. Well, if they should make money, all well and good, but if they should lose money, then, I would be quite unhappy. This is something that is constantly on my mind now.

I was really thinking of not blogging at least until China Minzhong's management has issued a more substantial response which, hopefully, would be a point by point rebuttal against the allegations made by Glaucus Research. Although some might disagree, I maintain that unless we have heard from both parties, it is too early to conclude anything.

So, what changed my mind and why am I blogging now? Well, as some might guess, I received quite a few emails, comments and messages over this matter. To all the people who have sent me encouraging messages and who have shown concern, my heartfelt thanks. I also received a suggestion that I could share my thoughts on what am I going to do now.

I read some unkind remarks that some have made about people who are invested in China Minzhong and some also made conjectures as to how we might hold demonstrations in Hong Lim Park, asking the government to intervene and, perhaps, even to hold GIC accountable. Well, apart from being unhelpful, these remarks might make affected investors feel worse about the whole matter. I will ignore these people. It is not a productive use of time and energy to engage in a debate with them.

Instead, all who are vested should think of what could happen and what to do.

Obviously, there isn't anything we could do until the trading halt has been lifted and this is unlikely to happen until China Minzhong has issued a more substantial response. There is always a likelihood that the stock could be suspended, pending further investigation. Whether a suspension takes place or not, we might want to make provision in our books for the possibility of a total loss.

Assuming that the stock were not suspended and that trading were to resume, shareholders would have to determine for themselves if they were satisfied with China Minzhong's reply. To stay invested or to divest would depend largely on this.

I will say that even if some of the allegations against China Minzhong should be proven false, this episode would still cast a pall over the stock and might affect its share price negatively. Only if all of the allegations were proven false would China Minzhong live to see the light of day once more.

Of course, there is really no way anyone could tell for sure how things would turn out next. Instead of guessing and losing sleep, the best thing to do is to get on with life and wait for further developments.

However, for people who have invested much more than they should have in China Minzhong, this could be a tall order. This is why I have said time and time again that we should always only invest with money we can afford to lose and not more.

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