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Who's to be Saddened by Netease's Trade Halt?
Netease, one of the three major Internet portals in China, was suspended by Nasdaq from trading on September 4. The so-called temporary suspension is none other than a euphemistic expression. After the trading halt, the shadow of being delisted, which was once regarded by some optimistic people as tiny failure has begun to loom darker.
Sina and Sohu, the other two large Chinese portals, would have been benefited a great deal from the halt. But like grieves for like, they also smelled the smell of sorrowfulness in the air. Sina although closed a little bit higher yet only at US$1.26, while Sohu was nearing to US$1.
For Nasdaq this is quite a common thing but for China's Internet economy this can be amplified into a fatally striking event.
Some people predicted sadly that in a short period China's dot com. could no longer get favors with foreign investors, since for the latter, a company's standard operation is as important as its business prospect. It is not worth to throw money into a company that doesn't treat investors and the public honestly.
As early as May Netease revealed its problem of false financial report, and since it had been busied itself with a new round of auditing work in an attempt to escape from being delisted. But Nasdaq seems to have remained unmoved, for Netease's stance is not enough to make up for the loss inflicted on investors and the whole market.
Notwithstanding, is there any domestic company that could laugh at Netease, whose misfortune lies more in a still fledgling economy in which financial fraud was regarded as something fashionable but it must face the game rules of a matured capital market that brooks no cheating?
The sad scene will happen again after the WTO entry, when economic rules can no longer be dealt with casually if any domestic companies would only gloat over the Netease's misfortune instead of examining their own behavior.
Practically Sina, Sohu and Netease's efforts represent a big step forward by Chinese enterprises into the US capital market. Compared with most of the other companies in inland China, they have undergone unimaginable hardships in business and financial management, as birth pains are unavoidable for a new emerging industry.
In this viewpoint, we should salute to the Nasdaq's strictness, because only when investors' interests are always taken into first consideration and protection can a security market grow healthily, and only a suchlike capital market can be a reliable support for an Internet economy in the future.
By PD Online staff member Li Heng
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