Luckin Coffee's (LK) alleged financial fraud and decline from an investor favorite to a penny stock is only the tip of the iceberg for the generally poor performance and Western investor skepticism of Chinese IPOs.
The latest in a series of setbacks
Even before the specter of accounting fraud and Covid-19 outbreak, Chinese IPOs struggled. At year-end, 2019’s Chinese issuers averaged a -16% return, with only 25% trading above issue, compared to a 31% return for the year’s other deals, with 64% above issue. The trend continued in the 1Q20, when all seven Chinese IPOs finished the quarter negative...
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