Things were so much easier when we could trust a "Made in China" label.
Far removed from the toxic lead paint recalls, but just as susceptible to being called back, many of China's recent IPOs have smacked into the Great Wall of investor indifference.
It was ChinaEdu's
It's yet another sobering moment for a market that has lost its Midas touch. Fellow for-profit post-secondary schooling specialist Noah Education
Am I the only one who remembers when the market couldn't get enough of this niche -- for example, when New Oriental Education
Don't think it's just the schools getting schooled. Online gaming specialist Giant Interactive
How bad has it gotten? Well, let's just say that Focus Media
Earlier this week, it snapped up CGEN Digital, a company that watches over a fleet of ad-supported flat-panel monitors that are strategically placed in high-traffic areas. The deal could be worth as much as $350 million, though CGEN probably had bigger dreams when it filed with the SEC to go public. It would rather take the near-term certainty of a buyout today than risk becoming another busted IPO.
The same thing happened earlier this year when Focus Media acquired online advertiser Allyes, another company that had taken steps to go public as a standalone company. It's probably not a coincidence that the Allyes deal was announced a day after the Shanghai exchange tumbled 9% lower.
So as bad as things are right now, you can count on others trying to turn lemons into lemonade. Until that "Made in China" lemonade gets any sweeter, it's going to be hard for all but the slam-dunk IPO candidates to be trusted.
Some other thoughts on buying into China now:
New Oriental Education has been a winning recommendation in the Global Gains newsletter service. A free 30-day trial subscription will give you all the freebie lemonade you can drink over the next few weeks.
Longtime Fool contributor Rick Munarriz is a fan of China's growth story, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
More from The Motley Fool
3 Dividend Stocks With Better Yields Than Johnson & Johnson
These stocks would serve your income portfolio better than Johnson & Johnson today.
Why Overstock.com Inc. Shares Popped Today
Plans to sell its retail segment and momentum surrounding blockchain names lifted shares of the e-commerce website.
The Tax Reform Bill Congress Will Vote on Next Week
Here's what made it into the final proposal.