READERS may recall that I wrote an article last Monday raising alarm over the cash-levels of S-chips – the China plays listed on our local bourse.

Fibrechem Technologies – one of the most followed counters in the sector – had been suspended from trading after its auditors experienced difficulties confirming its cash balances which was last reported to be worth HK$1.17 billion at the end of the third quarter.

And the article, aptly headlined "Jitters over cash positions of S-chips", explained why investors were getting worked up over the issue.

At the heart of these investors’ concern is whether the "Satyam syndrome" has also afflicted any firms listed here. This is a recently discovered corporate ailment which involves a company boss inflating earnings and inventing a huge cash pile to give the false impression of high growth.

And I quoted extensively from a JPMorgan Chase report written last September which had turned out to be prescient on the subject.

I will not deal here with all the issues raised by JPMorgan but it was a truly an eye-opener for me, going through the meticulous manner in which they gave a breakdown to the problems.

For my pains though, I was rewarded with a series of unhappy emails from local audit firms and errant accountants.

One email I got yesterday claimed that the report was "misleading, biased and unfair" and that it was in bad taste considering that the Government was trying to position Singapore as a centre for professional accounting services.

To whose bad taste? I wondered.

But I did write back to explain that these were salient issues of concern to investors and that it would be good to air them, rather than keep them in the closet.

Still, it was with a heavy heart to learn this morning that another company has succumbed to the Satyam syndrome.

China education provider Oriental Century has asked for voluntary suspension of trading, after its chairman Wang Yuean alleged that he "had made up fictitious accounting and related records to lead the directors, the chief financial officer and the auditors to believe that cash (worth 234 million yuan) were in existence."

The firm also disclosed that this development had come about, after its auditor KPMG told its CFO that they had "difficulties seeking reconfirmation of the bank balances and that there were doubts about the authenticity of a bank confirmation received earlier by KPMG".

But the problem does not end there.

Raffles Education, a widely-followed stock among retail investors here, has a 29.9 per cent stake in Oriental Century. It has been halted from trading since this morning.

Subsequently, in a statement to the Singapore Exchange, Raffles Education said that it had pumped in about S$30.2 million into Oriental Century.

If the China education provider ceases to be a going concern, it will have to write off as much as $34.6 million.

This latest development is only going to increase cynicism about China plays which some traders are describing as our own sub-prime nightmare.

How can this cynicism among traders be dispelled? I have no ready answer. It only takes a few rotten lemons to spoil everyone's appetite and colour their perception on the sector.

As a markets writer, I can only flag the concerns, and hope that relevant bodies like the Singapore Exchange can come up with an appropriate solution to alleviate investors' fears, while a huge global financial storm rages on unabated.

What a grim way to start the trading day.