Sino-Forest review will take months, shares ... Sino-Forest (TRE.TO) said on Tuesday it will take up to three months to debunk fraud allegations leveled by short-seller Muddy Waters, rattling investors and sending its shares down more than 30 percent. Hong Kong-based Muddy Waters earlier this month accused Sino-Forest of exaggerating the size of its forestry assets within its highly complex business structure. Though both analysts and the company have slammed the research firm's report, the company's shares have fallen more than 80 percent since the beginning of June, pulling down its market value by about C$4 billion. At least some of the decline reflects the Sino's inability to give a straightforward rebuttal that disproves the fraud allegations. – Reuters

Dominant Social Theme: This is an exception. Most companies in China are really well run and exceptionally transparent.

Free-Market Analysis: We've been waiting for something like this (see above). Critics are starting to engage with China in earnest and this is just one more sign of it. The Chinese stock market itself is an opaque mess and there is no reason to believe that Chinese "private" companies are any better run. In fact, there is good reason to believe that the Chinese government itself runs most major companies at least from behind the scenes when it comes to major decisions.