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The woman at the centre of the WiseTech maelstrom

It was a brutal assault, the savagery of which is seldom seen in the normally sedate and insular Australian sharemarket.Just over a week ago, a withering research report from J Capital Research hit the market, accusing the $10 billion tech darling WiseTech Global of overstating its profits and organic growth.

Speaking to the AFR Weekend from New York this week, the author of the report, JCap's Anne Stevenson-Yang, seems slightly bemused by the overwhelming reaction her analysis has elicited."I'm a little surprised that people care so much", she says. "We've had lots and lots of sign-ups. Traffic to the website has quintupled."But how does it feel to be in the centre of a market maelstrom that had more than $2 billion wiped off WiseTech's sharemarket capitalisation in a matter of days?

"It's always stressful", she concedes. "We find that when we do this work for clients, there's a lot of pressure because you know that the company will attack you over any tiny thing that you've got wrong."The unflinching clarity of Stevenson-Yang's report made its aftermath even more devastating."We estimate that overstated profit in the three years since WiseTech listed may be as high as $116 million", her report read. "That would be an overstatement of 178 per cent."

Alarmed investors dumped WiseTech shares, causing the price to slump more than 10 per cent, before trading in the stock was halted last Thursday.No sooner had WiseTech shares resumed trading on Monday morning, than JCap unleashed a second barrage.This time, the report highlighted WiseTech's history of dubious acquisitions and revealed that an independent survey found high levels of dissatisfaction among companies touted on the logistics software group's website as model clients.Once again, the WiseTech shares were sent reeling, and a second trading halt was declared.On Wednesday, WiseTech hit back. In a statement to the Australian Securities Exchange, the group's founder and chief, Richard White, responded.He vowed to continue to deliver long-term value to shareholders "regardless of the noise and market disruption of these short-seller, self-serving and misleading claims".As the brutal battle ebbed, shell-shocked investors were stunned to discover that the coruscating reports were penned, not by some aggressive hedge fund raider, but by a petite American woman, better known for her insightful, and decidedly sceptical, analysis of the Chinese economy.
Stevenson-Yang, who celebrated her 60th birthday by going on a kayaking and camping trip in the Arctic Circle in June, first moved to China in 1985, initially working as a journalist and magazine publisher.Several years later, Tim Murray, who has since moved back to Sydney's eastern suburbs and was Labor's candidate for Malcolm Turnbull's former seat of Wentworth at the last federal election, joined her publishing business.In 2007, the pair co-founded J Capital to provide research on the opaque Chinese economy and its business practices to hedge fund managers, bankers and foreign company bosses.Stevenson-Yang is, of course, impeccably placed to decipher the Chinese political and business system for foreigners. Not only is she fluent in Mandarin, she is also married to a former People's Liberation Army intelligence officer.

But her focus has since broadened. She says she's been living in the United States for years now, and that while she used to spend roughly half her time in China, "that's come down a bit. It's now less and less."

Robust discussions

WiseTech fitted the bill perfectly. "We felt this one was very highly valued and a bit suspicious", she says. What's more, she adds, it was of interest to the Sydney-based Murray.

So were they both involved in writing the reports? "We work on everything together but I was the author of the report", she replies. Still, there were plenty of robust discussions along the way.

"WiseTech numbers are very peculiar anyway. It was the most difficult accounting exercise we've had", she says.

"Tim and I argued a lot over the definitions of organic revenues and acquired revenues. We actually yelled at each other a couple of times over the phone."

Clearly, the relationship between Stevenson-Yang and Murray is strong enough to withstand the occasional disagreement.

"It's surprising that property has not gone into a death spiral. That just shows how much money the mainland government has spent to support it", she says."Those Politburo guys are more exposed to Hong Kong property than anyone."

It's classic Stevenson-Yang. She's long been a dauntless critic of the stark inequality of wealth in China and the opportunism and thuggery of the Chinese Communist Party elite.

In the past week, local investors have come to appreciate the extent of her fearlessness.

"Interesting situation"

But, she says, there is considerable downward pressure on the Chinese currency, as credit growth remains strong and as Chinese citizens find new ways around regulations aimed at stopping them from shifting funds out of the country.

In the meantime, she says, she's keeping a close watch on Hong Kong, which she sees as "a very interesting situation".

"I think Beijing has been trying for a while to use this dislocation and increasing violence to delegitimise the protests.

"It's really out of the United Front playbook," she says, referring to China's Communist Party organ, which runs its foreign influence and soft power operations.

Beijing's approach, she says, has been partly effective. "There are now a lot more Hong Kong people sick of disputes and protests, and the economy is in sharp decline. But I don't think it's worked as well as the Communist Party would have wanted."

She also points out that although Hong Kong's economy has been hard-hit by the protests, property prices there have fallen only by a modest 10 per cent or so.

But, she says, "that can't continue indefinitely because of the build-up in debt. Beijing is anxious to avoid a financial system collapse, so it's reining credit growth to around 12 to 13 per cent a year".

"And although this is a lot faster than China's economy is growing, it's not enough to stop the economy from wilting."

But what about the conventional wisdom that because Beijing controls the country's banking system, it has the power to avert any financial collapse?

Stevenson-Yang says this argument would be true only if China were insulated from the rest of the world.

"But China accounts for roughly 12 per cent of world trade, so China has to have a currency that other people accept.

"One effect of expanding the currency base within China is that it creates massive asset price inflation. If the money were not trapped in China, asset prices would not be so high.

"If people could easily take their money out, why would they pay $US2 million ($2.9 million) for a property in Beijing rather than spend $US2 million on a property in London?"