NetEase shares at 4-month low on growth, fraud concerns

Shares in China’s second-largest online games operator NetEase (NTES.NASDAQ) declined to their lowest level in four months on general concerns about the global economy and specific reports of accounting fraud at several NASDAQ-listed Chinese companies, Bloomberg reported. By market close on Monday, NetEase’s stock price had declined to US$41.58, the lowest level since February 9 of this year. The company’s plunge was accompanied by sympathetic declines in other US-listed Chinese internet stocks including Sohu.com (SOHU,NASDAQ), Baidu (BIDU.NASDAQ) and Shanda Interactive Entertainment (SNDA.NASDAQ). The Standard & Poor’s 500 Index declined for the fourth straight day, down 1.1%, while the Dow Jones Industrial Average lost 0.5%. Investors’ increasing concerns about Chinese stocks have been reinforced by the steady drumbeat of corporate governance scandals at US-listed Chinese firms, including Chinese technology companies. Last month Deloitte Touche Tohmatsu resigned as auditor of Longtop Financial Technologies (LFT.NYSE), saying that it had discovered serious irregularities in the company’s accounts; trading in LFT has been suspended since May 23.