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What: Shares of Chinese corn-based alcohol producer China New Borun
So what: My best guess is that the selloff here is a bit of a misunderstanding. After yesterday's close, the company filed with the Securities and Exchange Commission to report that it is changing auditors -- from BDO Li Xin Da Hua to BDO China Shu Lun Pan. Why did it do this? Simple: The audit team it was using at BDO Li Xin Da Hua moved to BDO China Shu Lun Pan. If the company had stuck with the same BDO member firm that it had been with, it would have had to use a new audit team, which would be a hassle. However, some traders that are quick on the trigger may not care about the finer details here, as auditor issues have caused serious problems for many other small, U.S.-listed Chinese companies.
Now what: Of course, it's also possible that the auditor announcement has little to do with the stock's slump today. Between last Friday and yesterday, the stock has been on a massive charge, gaining more than 50%. Today's drop could simply be some traders taking profits. Either way, though, it's obvious that this is a very volatile stock, so investors orbiting around China New Borun should continue to expect a roller-coaster ride.
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