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http://blogs.ft.com/beyond-brics/2012/09/05/short-selling-debate-china-tech-fights-back/ http://blogs.ft.com/beyond-brics/2012/09/05/short-selling-de... the id

http://blogs.ft.com/beyond-brics/2012/09/05/short-selling-debate-china-tech-fights-back/ http://blogs.ft.com/beyond-brics/2012/09/05/short-selling-de... the idea is that you promise to sell stocks in the company at some future time (at a price fixed now), then diss the company so that their stock drops, so that by the time you need to fulfill the contract you can buy the stock cheaper than the agreed price. (no idea if this is true or not - had not heard of citron until this thread)

seanmcdirmid 14y ago
Usually you short because you think a stock is overpriced and you have good reasons for that. Chinese companies are also often incredibly opaque, making them good targets.
ximeng 14y ago
This is what shorting is, and this is what Citron do. Their Sohu report highlighted in the FT report was really bad, and Li Kaifu took it apart in detail. Citron are not particularly constructive in their criticism, and the Sohu report really was weak to someone with a basic understanding of the China software / internet market, so there was an understandable backlash from Chinese internet companies who want to protect the reputation of their market given that many of them list ADRs on Nasdaq. That said they started out a few years ago with some successful short calls, just recently the opportunities seem to be somewhat less as many of these companies have solid revenues despite the lack of transparency.