* Orsus Xelent soars
* Major Chinese names Renren and Youku.com slump again
* Scandals continue to overhang Chinese stocks
(Adds bullet points, details on Chinese shares, SEC actions)
By Ryan Vlastelica
NEW YORK, June 13 Shares of Orsus Xelent
Technologies Inc ORS.A rallied on heavy volume on Monday,
continuing a recent meteoric rise for the Beijing-based maker
and distributor of cell phones.
The stock advanced more than 70 percent before paring gains
to close at $5.50, up 44 percent. Volume was more than 4.17
million shares, about 14 times the 50-day average volume. Since
a recent low of $1.45 reached on June 6, the stock has surged
more than 320 percent.
The catalyst for the rise in Orsus was not clear, and the
company could not be contacted for comment; the phone number
for Orsus' New York office was not in working order and no one
answered at Focus Asia Partners, its investor relations firm.
Orsus rallied as other well-known Chinese names continued
to suffer. Popular Internet ADRs, such as Youku.com YOKU.N,
Renren Inc (RENN.N) and E-Commerce China Dangdang Inc DANG.N
were all hammered anew. E-Commerce China lost 19 percent to
close at $10.74, while Renren and Youku each lost 14 percent.
Brokerages have imposed greater restrictions on borrowing
money to buy certain Chinese stocks of late, which has
intensified the pressure on many Chinese names amid a rash of
accounting scandals that have resulted in numerous share trade
halts and suspensions.
The scandals recently prompted the Securities and Exchange
Commission to issue a bulletin of risk against investing in
companies that enter U.S. markets through reverse mergers, as
Orsus Xelent did. For details see [ID:nN08279183].
Two companies whose share trading was halted in March,
China Intelligent Lighting and China Century Dragon Media, were
blocked from selling more shares to private investors by the
SEC on Monday. For details, see [ID:nN13123878]
The increasingly cautious tone on Chinese companies sparked
a rash of selling, with investors cutting positions in stocks
based in the country, including names not listed by brokers as
appearing risky, as well as industry bellwethers.
Orsus made its most recent regulatory filing on May 23,
when it detailed delayed first-quarter results. Orsus swung to
a net profit in the quarter, though sales were down about 49
percent to $3.9 million. It has not issued a press release
since Dec. 30, 2008, when it gave the minutes to its 2008
annual shareholders meeting.
Interactive Brokers Group Inc (IBKR.O) recently listed
Orsus as among those whose shares it would bar buying on margin
by clients, citing "elevated risk concerns." More than 160
securities were listed by Interactive, which made the
announcement following a rash of accounting scandals that have
led to delistings. Scottrade later released a list of 55 stocks
that investors are prohibited from buying on margin.
The gains in Orsus are notable for coming at a time when
investors have become more guarded on the region. However,
short interest on Orsus has surged, rising 634 percent in the
second half of May, according to data from Amex, where Orsus is
Despite the recent gains at Orsus, the stock remains well
under an all-time high of more than $90 reached in October
2007. Its current market capitalization is less than $10
The company was created in March 2005 through a reverse
merger between Universal Flirts Corp, a Delaware-based company,
and United First International Ltd, which was the parent of
Orsus Xelent. The name was changed shortly thereafter to Orsus
Xelent, according to regulatory filings.
(Editing by Leslie Adler)