Though our preference is for the private sector to take the lead in investments, both may yet attract the private investment in technology that they need. We hope so, since some in Asia need convincing that instant noodle won't fuel an economy far. Y ou've seen them before, profit warnings issued by companies ahead of the actual release of quarterly or annual reports. With Guangdong International Trust and Investment Corp., or Gitic, busted, it's no surprise then that as many 59 Chinese listed companies have issued loss warnings this month, with still a third of January to go. If this honesty translates into a new zeitgeist on the mainland, it will mean shedding a layer of fantasy that has sustained investment in China.
Markets work on information.
Bad information or even lies will price a company's shares, but it values them inaccurately. Sooner or later the truth emerges, causing a painful correction. Earnings or loss warnings are another level of information, of truthfulness, meant to prepare the market for bad news. China has long had an information deficit, and company annual reports often are read with a degree of scepticism. The problem, however, is that if those reports contain the only company numbers around, then they are the only game in town.