Simcere Pharmaceutical Shares Plunged: What You Need to Know (SCR)

Simcere Pharmaceutical Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Simcere Pharmaceutical Group (NYSE: SCR ) dropped 10% in intraday trading today as investors continued to doubt the financial health of U.S.-listed Chinese companies.

So what: After a series of scandals involving accounting irregularities at Chinese companies, the Securities and Exchange Commission launched a broad investigation last week. It also warned investors to review company filings, especially for companies that are not required to file SEC reports.

Now what: Last week, Nasdaq upped the fear factor by moving to raise the bar on proposed new listing requirements for companies that come public via reverse mergers, a popular tactic for companies involved in the scandal. Numerous brokers, concerned about being left holding the bag, are no longer allowing investors to buy many Chinese stocks on margin, which has led to margin calls. Stock sales to cover the margin calls are contributing to the sell-off.

Interested in more info on Simcere? Add it to your watchlist by clicking here.

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Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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