At the end of last week, Yangzijiang Financial (YZJ Finance) announced the resignation of its CEO. The chairman, Mr Ren has returned from retirement to take over the reins.
Signs of Difficulty in Investing in China?
Not much can be gleamed from the resignation notice because it is the cookie cutter reply that the resignation notice is to pursue other opportunities. However, if I were to venture a thought; it could be how difficult it is to invest in China. For Mr Toe, the initial plan was to move more of its investments out of China and into Singapore as a form of diversifying YZJ Finance base.
However, 1.5 years on, no much has materialised. Instead YZJ Finance has been rolling over its debt instruments in China. This is likely due to the credit crisis in China and that China requires all the capital to save its own economy. YZJ Finance has been 'forced' to put 50% of its assets in China to help the country in distress.
Sell Down in Market
YZJ Finance was in a sharp sell down of 15% to the lows of 28.5 cents. I rebound has been seen with share prices at 31 cents. It is likely YZJ Finance conducted a share buyback.
The share buyback by YZJ Finance has been one of the weirdest notion. While Chairman and now CEO, Mr Ren, has been emphasising that his company is undervalued, with each passing day as the share price goes lower, the amount of share buyback done by YZJ Finance gets lower. Logically, one would have thought as the share price trends lower, more buybacks will be done. Is this a sign that the cash rich company in fact does not have much cash in Singapore and the cash is indeed stuck in China doing national service? Right now, China is one big black box where cash by many of its companies are tied up somewhere, so many things are now in speculation, creating gyrations and uncertainty among China theme stocks.
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