Over the past month, China has continued on its path to recovery with the number of new Covid-19 cases now minimal.
Production activity and coal consumption in China have returned to above 75% of the pre-Lunar New Year levels when the epidemic first broke out.
120 million (about 70% of total) migrant workers have returned to their job locations as reported by China's Ministry of Human Resources and Social Security.
Looking forward, we expect a slowdown in the pace of recovery, given that demand for exports has started weakening and some control measures will remain in place to prevent a second wave of the virus outbreak.
Accounting misrepresentation by US-listed Chinese companies
There is no doubt that this crisis has created investment opportunities, for example in e-commerce.
However, times of stress also have a way of exposing frauds. Indeed, there are currently a number of negative stories and rumours circulating about popular Chinese listed companies.
Some may be true whilst others could be 'fake news' and therefore represent great investment opportunities - proper research is key.
As Warren Buffet has said: "When the tide goes out you discover who has been swimming naked."
Two accounting scandals in the first week of April coupled with several short-selling reports have put US-listed Chinese companies under the spotlight.
Luckin Coffee, the largest coffee house chain in China, reported that its chief operating officer and some subordinates had fabricated billions of yuan in sales in 2019. Shares of Luckin Coffee have been suspended after an 83% plunge.
TAL Education, the country's largest after-school tutoring business, disclosed that an employee had inflated sales by forging contracts.
GSX Techedu, an online education company and IQiYi, an online video platform, were both attacked by two foreign short-sellers.
The issues under scrutiny, except for Luckin Coffee, are rather less material and their share prices remain largely unaffected. Unfortunately, Luckin Coffee appears to be a large-scale accounting fraud at top management level.