Chinese companies listed in American exchanges plunged on Wednesday tracking the DJIA down. As the following chart reveals, the wide China ADR Index (CAI) lost 44.3% year-to-date (YTD) thanks to the free fall of large cap Chinese companies.

Trading today showed again how much large cap companies matter. China Mobile (CHL), the largest cell phone carrier of the world by subscribers, weighted on the overall index. Shares of CHL lost $1.01 or 1.16% on expectations that it's going to be China Unicom (CHU) and China Netcom (CN) that will benefit from the telecom industry restructuring, while CHL will lose steam on the long run.

Chinavestor.com, an independent stock research firm specializing on Chinese ADRs or China companies listed on U.S. stock exchanges, is proud to serve the wider investment community by making previous Newsletters public. Current topic of August 2008 Newsletter is: "Earnings season is on. Let's go stock specific." It is available for subscribers only and will be made public in September. July 2008 Newsletter is about explaining why U.S. equity markets have such a profound impact on the performance of Chinese stocks listed in Hong Kong (H-shares) and in New York (ADRs). We believe it still carries a lot of useful and relevant information applicable to today's market environment.

Chinese ADRs are trading mixed today after the lunch with NASDAQ listed names shining more. Baidu.com, China's premium search engine company, is up $7.15 or 2.15% at $339.55, extending gains from last week following better-then-expected earnings. As the following table testifies, large cap NYSE listed Chinese ADRs are pulling down the China ADR Index (CAI). The index lost 24.4% year-to-date (YTD) with notable difference between NASDAQ and NYSE listed ADRs. While the market cap weighted overall index lost almost 15% YTD, NASDAQ listed Chinese ADR Index or CQI holds up much better by shedding -15.4% YTD. This performance is not much different then major U.S. indices themselves.

Oil came back $2.16 to settle at $131.04 at the New York Mercantile Exchange sending investors to cash in previous gains. Bank of America reported better-than-expected losses following similar announcements from Citigroup, JP Morgan & Chase and Wells Fargo. Some take this as if the worst is over however earnings prospects are soft for many industry leaders such as Merck and Schering-Plough Corp. Despite weakness in the U.S. markets shares of Chinese companies listed in the U.S. ended the day on a high note. The overall China ADR Index (CAI) gained 14.38 points today with NASDAQ listed Chinese ADRs outperforming their NYSE counterparts.

The China ADR Index (CAI), measuring market cap weighted performance of Chinese ADRs listed in the NYSE, NASDAQ, and AMEX, lost 28.30 points after two hours of trading today and is down by 28.94% year-to-date (YTD). Large cap, mostly state enterprises listed on the NYSE lost -29.02% YTD while small cap Chinese stocks fueled by entrepreneurial spirit are holding back a little better by losing 26.84% YTD.

Stocks in Asia and Europe rose at the end of the month as fears of a deep U.S. recession receded. Despite favorable global economic climate change, Chinese stocks haven’t regained their shine yet. As the chart on the page testifies Chinese domestic shares in Shanghai are off 35% year-to-date (YTD) a far cry for U.S. China stock investors whose benchmark, the China ADR Index is down by 16.7% YTD.

There is not much to be happy for as far as Chinese stock trading goes today. Most of Chinese ADRs are giving up gains of previous days, such as Baidu.com after yesterday's $25 rally. As the following summary table shows, the China ADR index (CAI), a broad measure of the performance of Chinese ADRs, lost 23.48 points today and is down 25.8% year-to-date (YTD).

We took the risk to say a month ago that “we think Chinese equities are nearing the bottom. Looking at Asia and China in particular, we find both macro and micro economic data to fuel our optimism. “ Since then the China ADR Index (CAI) rallied 7.5% in line with the Hang Seng’s 7.0% comeback, outshining the Shanghai Composite’s modest 3.7% rally. Have Chinese equities bottomed out?

China ADRs or U.S. listed shares of Chinese companies made a remarkable comeback after hitting all time lows YTD on March 20th. As the following chart demonstrates, Chinese stocks trading in Americn stock exchanges are down by almost 15% year to date (YTD) vs. the 28% negative return measured in late March. This makes it a 13% comeback in just two months, fueling investors optimism.

There is not much direction to find in market sentiment lately. While February turned to be a comeback for Chinese shares listed in the Hong Kong Stock Exchange, the same stocks nosedived in the U.S. the last trading day of the month tracking major U.S. indices lower. As the chart on the page demonstrates, February was somewhat an improvement over January for stocks in Hong Kong measured by the blue chip Hang Seng Index. Stocks posted their best monthly gain since October in Hong Kong. At the same time, the selloff on February 29 in the U.S., a day the DJIA fell 315.79 points, left the stock market stuck in a rut with no clear indication to get any better. As the saying goes, it will get worse before it gets better… The U.S. listed stock universe, measured by the China ADR Index (CAI) has not been able to recover January losses and fell heavily on Friday along overall market sentiment.

Shares of Chinese equities listed on U.S. exchanges, referred to as ADRs, are trading sideways after the open. Large cap stocks seem to be consolidating after yesterday's huge rally with Baidu.com as exception. China's search engine giant, Baidu, is up another $5.27 at $265.66 passing the $260 resistance level easily. Baidu reported strong 2007 Q4 and full year earnings yet was on the low side, following weak market sentiment. But this time when sentiment is undecided, fundamentals came back on play, propelling Baidu back to the $260+ range.

With no action in China in due to the Chinese New Year kicking in, U.S. listed Chinese stocks or adrs tracked U.S. market sentiment very closely. Regarding the home market, Wall Street finished a dismal week with a mixed performance Friday as investors grappled with fears about insurers of distressed mortgage-backed bonds and anxiety about the broader economy. The DJIA dropped over 60 points while the NASDAQ composite gained.

Chinese New Year celebrations closed down the Hong Kong and Shanghai Stock exchanges. This has no effect on the trading of Chinese stocks listed on U.S. exchanges. The China ADR Index (CAI) gained 21.14 points on Thursday, fueled by strong gains in the telecom sector, particularly CHL.

Chinese stocks pulled back on jittery U.S. market sentiment after a Federal Reserve official suggested rising inflation could prevent the central bank from making further interest rate cuts. The measure for the performance of Chinese stocks on U.S. exchanges, the China ADR Index (CAI), lost -29.34 points today to close at 838.4.

Shares of Chinese companies listed on U.S. exchanges experienced one of the worst month in history. The China ADR Index (CAI), an overall barometer for the performance of all Chinese equitites listed on the NYSE and NASDAQ combined, lost -15.60% and the last trading day hasn't started yet.

The China ADR Index (CAI) lost -9.57 points to read 863.61 by noon on Monday. NYSE listed Chinese equities held up better, the China NYSE Index (CYI) lost only -9.38 points while the China NASDAQ Index (CQI) is down by -14.21 points. Oil stocks are weighting on the index heavily. Index heavyweight PetroChina (PTR) lost $2.63 or -1.78% to $145.20 dragging down the index. Asia's largest refiner SNP lost $2.48 or -2.12% while offshore specialist CEO lost $2.48 or -1.70% to trade at $143.02.

Chinese stocks made a modest comeback by noon on Friday. The China ADR index, measuring cap weighted performance of 67 Chinese stocks, is up 0.35 percent. NASDAQ names are up almost one percent. NYSE names are laggards.

9:30 A.M. reading: Chinese indices plunged with NYSE listed Chinese stocks most. NASDAQ listed Chinese stocks have been already beat up and finally, NYSE names came down, too. PetroChina (PTR), Sinopec Corp (SNP), China Telecom (CHA) and China Mobile (Hong Kong) Ltd., (CHL) dragged the NYSE listed China stock index (CYI) to historical lows since its inception. CYI lost -13.15 percent versus last Friday, posting its single biggest one day drop ever. Among NASDAQ names, Baidu.com Inc. (BIDU) , Focus Media Holding Ltd. (FMCN) , Ctrip.com (CTRP) and JA Solar Holdings Co. (JASO) were most severely hit.

U.S. listed Chinese stocks came back strongly by the end of the day, NYSE names in particular. China Mobile (CHL), China's largest mobile operator came back especially strong by gaining $2.67 or 3.75 percent on Friday to finish at $77.39. Some of the institutional investors made use of the opportunity to pick up good quality stocks.

U.S. listed Chinese ADRs plunged on Thursday, suffering their worst two-day fall. As the following table shows, the "China ADR Index" (CAI) is down by -12.28% year-to-date (YTD), the "China NYSE Index" (CYI) is down by -11.95% YTD, and the "China NASDAQ Index" (CQI) is down by -21.0% YTD. These indices are market cap weighted and are set at 1,000 as of January 1, 2008.

At Chinavestor we have always argued that investors have to understand the fundamental differences between NYSE and NASDAQ listed Chinese companies. NASDAQ listings offer higher retunrn in general but at a price of higher risk.