The whole idea of a stock market is to level the playing field so the ones that perform would draw the investors' attention and money.

And yet time and again, market does the opposite. The ones that deserve most our financial votes are buried in a mound of dirt and flies.

That would be an apt description of how the market perceives and treats stocks that are evidently from China and not one among the locals.

This tendency to blackball everything from China whilst according all from Malaysia as great and awesome borders on the ludicrous and defies our innermost logic as we have replaced sensible investment with ones that are built on prejudice and fear mongering.

Yeah, it doesn't take a neighbour next door to do all that especially when all the crummy thoughts about getting rid of the fat from the milk has been ingrained in our thoughts ever since we learnt to read the newspapers and watch the media spin.

Of course, no parent in his or her right mind would ever dream of denying the fat in a mother's milk to a child. Without it, no child can grow to be healthy and intelligent.

The latter two ingredients are the essential building blocks that are missing in today's conversation about stocks in KLSE.

To level the playing field, Bursa must institute an equal marking system whereby all stocks listed on KLSE must be covered by at least two independent analysts and issued ratings by rating agencies in a fair and transparent manner.

The fair coverage rule would negate the unequal treatment that is being meted out to stocks that are fundamentally strong but suffer from a lack of publicity in media and mainstream analysts' coverage.

In the absence of a fair coverage, stocks such as China Automobile Parts Holdings Ltd (CAP) and Xinghe Holdings Berhad have failed to gain traction among analysts and investors alike leading to the general but false perception that they're just another 'China stock'. The quote and unquote I added to emphasize how fiction is being fanned in the minds of analysts and investors because they'd rather be servants of prejudice than champions of truth and information.

The fact of the matter is public perception grows with a greater exposure in media and analysts’ writings. Unless we fundamentally change our ways to incorporate fair thinking and affirmative actions to rid our thoughts of ‘racial or national profiling’ in our investments, no sane and honest discourse on Chinese stocks (in a prejudice free environment) is possible.

As far as fundamentals are concerned, China Automobile Parts Holdings Ltd (CAP) ought to be in the RM1 and above price league based on its expected PE ratio of 13x for FYE 2015 / 2016 and yet its stock is grossly undervalued at 34 sen per share as at 18 June 2015. This is despite the fact Credit Suisse is a major shareholder of the same with a roughly 6% stake since late May and following a reported offer from an Australian mining firm Siburan Resources Ltd to acquire a 16.67% stake in the company for 60 sen per share (at a 15.5% discount to its net tangible assets) and the company’s proposed rubber recycling joint venture in Xiamen, China with Sekhar Research Innovations Sdn Bhd.

Another company that ought to be in the RM1 and above price league, is Xinghe Holdings Berhad which is one of the biggest six edible oil companies in China. And yet its shares are trading at a measly 7 sen per share despite being a heavyweight in peanut oil and peanut protein cake business.

If this were a world cup, they would have easily beaten Ifca hands down and won the cup. But KLSE is not a world cup, where a fair fight would have ensured the better stock wins. The fundamentals speak for themselves. But only if sanity and reason can be summoned back into the court of public opinion.

The notion that ‘all Chinese stocks must be bad’ is a fiction perpetuated by false assumptions and prejudice. It’s time we stopped believing this nonsense and made some real effort in understanding stocks (China or not) based on their individual merits.

                                                                                                                                          Ezra, 19 June 2015