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What: Shares of Chinese probiotics products specialist China-Biotics (Nasdaq: CHBT ) were looking green around the gills today, shedding as much as 18% in intraday trading.
So what: This has been quite a day for Chinese small caps. China-Biotics is the third stock that I've covered to get hit by fraud-ish allegations today, joining Yongye (Nasdaq: YONG ) and Gulf Resources (Nasdaq: GFRE ) . China-Biotics apparently owes its woes to a Seeking Alpha post by an individual investor trying to "perform a mini-DD (due diligence)." When that effort raised some head-scratching issues, emails to the company and related third parties didn't bring the author clarification. As a result, he decided to sell his shares in the company.
Now what: Perhaps I'm missing something in today's drop, but it's pretty jaw-dropping if it is indeed being driven by one Seeking Alpha post. There's not a whole lot of heft to the post, and the conclusion seems to be that since the company didn't respond to a series of emails, the worst-case scenario must be true. This is no knock against the author -- he's simply sharing his personal views and investment decision. Instead, it's a knock against investors in the Chinese small-cap segment, who have become so scared of their own shadows that any small bump in the night sends them jumping through the nearest window.
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