The bitter taste of Luckin Coffee, Equity investors want profits now; Kazakhstan’s political debt

From the editor’s desk, April 10, 2020.

Luckin Coffee’s share price dropped more than 80% last week after findings from an internal investigation concluded that the group had inflated sales figures for the better part of 2019. The implications for not only the company, but the Chinese ADR universe, are outlined in Carol Huang’s “Luckin Coffee fraud has big implications for Chinese issuers,” arguing that besides the securities regulator, investors too need to reevaluate their risk appetite and require better tools to achieve it.

Knowing this, the Luckin fallout could discourage similar Chinese private companies from going public. The benefits of keeping a closed book may outweigh...