Let me lay out some trading strategies for the day ahead. Baidu,com (NYSE:BIDU) is my first choice - a stock that is liquid, volatile and has sound fundamentals. This is the stock one can make quick profit - or loss - depending on how you execute trades. The stock is volatile compared to Chinese ADRs measured by the "FXI" - see chart here

Steep losses right at the open. The DJIA is down 242 points in the first 15 minutes of trading. Europe and Asia was not any better either. Hong Kong's Hang Seng closed below the 17,000 level not seen since 2006. These losses are attributed to the plunge in the Dow on Friday. So it looks as if the downward spiral has started.

It seems it is not a good time to talk about Chinese mobile operation industry as people are anxiously waiting for the revised US bail-out plan, and global share markets tumbled in the anxiety. However, as a mater of fact, the credit crunch and liquidity squeeze caused by subprime mortgage crisis have limited impact on Chinese economy.

Given the tremendous impact of the “bail out” plan on American stock markets, this Newsletter is non-traditional in a sense that it will give investors guidance for the upcoming days versus a month. To put latest developments into perspective ...

Good morning. Chinese companies that dropped the most came back strong this morning. This comes as a no surprise after Hong Kong edged higher and index futures pointed to a higher open. Altogether I think we will see insignificant volume until Thursday when the House votes again on a revised bill. If that passes, we're up to a sizeable rally. If fails, I don't know. It better passes the second time.

A new restructuring scheme of telecommunications was announced on 23rd May 2008. As the proposal says, the basic telecom service of Chinasatcom is incorporated into CHA and the latter one purchases CHU’s CDMA (including capital and business) by RMB 110 billion; CHU mergers with CN by stock - 1 CN share by 1.508 CHU share and 1 CN ADR by 3.016 CHU ADR; CHL consolidates with Chinatietong. Briefly speaking, the number of telecommunications service providers in China will be reduced from six to just three and only CHL, CHA and CHU exist.

It's 11:00 A.M. on Monday and is a good time to take a deep breath and see what lays ahead today's trading for Chinese ADRs. For starters, energy pulled the broad Hang Seng Index up 1.6% after Friday's record 9.2% rally. Petrochina (PTR) had a strong showing closing 5.1% higher on the back of strong oil. So today's gain of $2.44 on the NYSE comes as no surprise. Aluminum Corp. of China (ACH) is strong today on news that the company is not considering cutting additional production despite low aluminum prices.

Wall Street continued yesterday's rally by adding another 400+ points before 10:00 A.M. on Friday. Strong market sentiment carried over to Chinese ADRs, too. Stocks that were hit the hardest came back real strong this morning. CNOOC Ltd. (CEO), China's top off-shore oil producer, is up $12.73 followed closely by Sinopec (SNP) and Petrochina (PTR). Another huge company, China Mobile (CHL) is strong and is up $4.90 in the first few minutes of trading. Europe's largest bank, HSBC Plc (HBC) is up $4.78 or 6.01%.

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.

News that Freddie Mae and Freddie Mac will be taken over sent American indices soaring for the day. Strong market sentiment spilled over to Chinese companies listed on U.S. exchanges. But just how much they rallied - or which ones made investors cheer or cry - is summed up by the following table. This table is designed to sort Chinese ADRs based on their performance measured by change in dollars. The best stock was Baidu.com (BIDU), China's search engine giant, adding $3.72 to Friday's close. The stock is way oversold and is seen by many as a possible come back kid. Stronger dollar pushed Asian refiners higher as oil fell. Sinopec (SNP), China's largest refiner gained $.74 followed closely by Petrochina's (PTR) $.36 gain.

While the DJIA rallied on oil, GDP and jobs data, index for Chinese companies listed on American exchanges fell, fell hard. The China ADR Index (CAI) is a market cap weighted index and as such large cap Chinese stocks listed on the NYSE have a substantial impact on it. The index fell 16.54 points today and is down 28.92% year-to-date (YTD). This is in sharp contrast to NASDAQ listed Chinese ADRs measured by the China Nasdaq Index (CQI). The index is up today thanks to the larger Chinese ADRs of Ctrip.com (CTRP) and Baidu.com (BIDU).

China Netcom Group (NYSE:CN), China's smaller fixed line carrier, announced interim results for the first six months of 2008. This is the last time the company reports on its won without China Unicom (NYSE:CHU). CHU will acquire CN's fixed network and integrate it together with current GSM network. CHU's smaller and less dynamic CDMA network will be sold to China Telecom (NYSE:CHA), completing the largest telecom industry restructuring the world has seen yet.

China Unicom (CHU) and China Netcom (CN) submitted a document of proposed merger of the two to the Hong Kong Stock Exchange today. According to the document, last day of trading for China Netcom ADRs will be October 6, 2008 followed by a complete withdrawal of CN ADRs from the NYSE listing as of October 15, 2008. China Netcom as we know it will cease to exist while China Unicom will get a new name. The document lays out a clear timetable of events. What's not in the document but is very important is this: CN's fixed network with 109 million strong subscriber base will get a mobile phone arm - CHU's GSM network. This is the better one of CHU not just by subscriber numbers but by dynamics, too. While CHU's GSM network boosts 125 million subscribers and is growing at a rate of 1.1 million a month, CHU's CDMA network - soon to join China Telecom - counts only 43 million subscribers with a growth rate of 0.4 million a month.

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.

We use different technical tools to determine what stock stick out - all these before the market opens. This time we find the Overbought/Oversold indicator extremely useful. This tool picks up five stocks that are way oversold and thus offer turnaround opportunities today: China Eastern Airlines (CEA), Sina Corp. (SINA), Sohu.com (SOHU), CNOOC Ltd. (CEO) and China Mobile (CHL). As the following Google chart suggests, their slip yesterday in percentage points are somewhat different, - chart here - however unusual big moves are best picked up by a stock specific tool - such as the overbought/oversold indicator.

Chinese ADRs are caught in the wind along the DJIA and have gained significant momentum in the last three trading days. Number of Chinese ADRs trading above 50 day-moving-averages or DMAs increased from alst week to 13 with two of them reaching the "overbought" status, more than last week. Four ADRs are classified as oversold, less than last week. Overall, it's a pretty strong showing for the China plays.

There is not much direction to find for U.S. listed Chinese ADRs in Asian trading this morning. Trading in Hong Kong was extremely weak - in fact turnover in Hong Kong recorded the lowest volume this year. Shanghai is obsessed with another mega IPO, this time China Southern Locomotive is going public, raising concerns that already slim liquidity might dry up. This is the time when technical indicators are extremely useful. One of them is the so called Overbought / Oversold indicator, or simply OBOS. This tool looks into stock trading characteristics and determines if a stock went up too much too fast - thus is susceptible for a pull back or just the opposite. The following picture is a screenshot of Chinavestor's OBOS indicator posted for Premium Subscribers before the opening bell. Based on the indicator, three stocks look interesting for daytraders today: NetEase (NTES), China Unicom (CHU) and Baidu,com (BIDU).

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.

Shares of chinese companies listed on the U.S. exchanges opened up mixed. China Mobile (CHL), the world's largest mobile phone company by subscriber number came back strong in Hong Kong, signalling a good start for the day in New York. The positive outlook of the industry leader had a positive effect on smaller players such as China Ntecom (CN) and China unicom (CHU). All three Chinese telecom companies are between 2.38% and 1.55%.

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.

Large cap Chinese ADRs helped lifting the China ADR index (CAI) by 3.96 points. Still, the index lost a quarter of her value since the beginning of 2008 and jittery market conditions in the U.S. keep pressure on Chinese stocks. Couple of stock of interest: Aluminum corp. of China (ACH). The stock lost another -2.54% today on weak outlook. Today's performance came as no surprise to us, because events just unfolded as we predicted it on last Saturday. Here is the actual posting on the blog from last week

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?

Last week we published a study that looked at 10- and 30-day moving averages and their crossing patterns to find momentum stocks. We continue with some technical analysis today by introducing the Overbought/Oversold techincal indicator. The one we use gives investors a gauge of the market in a snapshot by laying down all Chinese ADRs on a single paper. This method makes it very easy to find stocks that are out of their normal trading characteristics; thus offering trading opportunities.

China's telecom industry restructuring got the green light on Saturday, May 24, 2008. This is the Chinese telecom landscape before and after. While the general idea of leveling the battleground for telecom players may sound well, the end result will be three seemingly similar, yet different companies. As an investor, you should look into details to get ahead of the game.

By leveraging our premium network, strong brand recognition, economies of scale and highly effective refined management, the Group continued to maintain a favorable growth in its financial results for the first quarter of 2008. The Group’s operating revenue reached RMB93.024 billion, representing an increase of 19.7% compared to the same period of last year. EBITDA reached RMB49.777 billion, representing an increase of 22.2% compared to the same period of last year. With the positive effect of lowering the income tax rate in Mainland China, profit attributable to shareholders reached RMB24.102 billion, representing an increase of 37.2% compared to the same period of last year. Margin of profit attributable to shareholders reached a relatively high level of 25.9%.

If there were no expectations on a potential revamp of telecommunication industry, China Unicom would be considered overvalued at current price although it reported doubled profits for 2007 full year result, however, considering the revaluation of two networks of China Unicom in the case of the restructuring, China Unicom is a good buy at current value. We will address these points below in detail:

This notice is made pursuant to section 99 of the Companies Ordinance (Chapter 32 of Laws of Hong Kong). Reference is also made to the 2007 annual results announcement of China Mobile Limited (the ‘‘Company’’) published on 19 March 2008. Notice is hereby given that the register of members of the Company will be closed from 6 May 2008 to 8 May 2008 (both days inclusive). During this period, no transfer of shares will be registered. In order to qualify for the 2007 ordinary final and special final dividends, all transfers of shares accompanied by the relevant share certificates must be lodged with the Company’s share registrar, Hong Kong Registrars Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not later than 4:30 p.m. on 5 May 2008. The ordinary final and special final dividends will be paid on or about 21 May 2008 to those shareholders on the register of members on 8 May 2008.

Financial Results
In 2007, the Group’s operating revenue continued to grow, reaching RMB356,959 million, representing an increase of 20.9 per cent. over the previous year. Profitability was significantly enhanced, and profit attributable to shareholders reached RMB87,062 million — an increase of 31.9 per cent. over the previous year. Margin of profit attributable to shareholders reached 24.4 per cent., which is high compared to industry standards. EBITDA reached RMB194,003 million, representing an increase of 21.6 per cent. over the previous year while basic earnings per share reached RMB4.35, an increase of 31.0 per cent. over the previous year. I am delighted to say that the Company’s financial strength as shown by its strong cash flow and sound capital structure provides a solid foundation for sustainable future development.

A near 20 percent correction in the Chinese stock universe in January marked the worst month for Hong Kong equities since Oct. 1997 as rising risks of a U.S. recession prompted a global equities sell-off. As the following chart suggests, the Hang Seng Index of Hong Kong lost 15 percent in January alone. U.S. listed Chinese stocks did not make it any better as the broad China ADR Index or CAI lost 14.7 percent, too. U.S. stocks held up better, sending the DJIA down 4.9 percent for the month to 12,650. To make matters worse, ratings agency Standard & Poor's said it cut or may cut its rating on up to $534 billion of subprime bonds. Where is the bottom? Where do Chinese ADRs go from here?

Trina Solar (TSL) surprised investors with a stunning 15% steady advance throughout the day. Large cap stocks dominated today with CNOOC Ltd (CEO) gaining $4.00 on strong oil prices. Shanda (SNDA) continues to really before earnings announcement later this week. CHL is up $0.88 on news that industry restructuring might not take place as thought. CHU was sold heavily in overseas markets of Hong Kong and Shanghai earlier the day.

China Mobile reported record number of subscriber growth in the month of January 2008. CHL added 7.044 million new subscribers in January, now serving 376.38 million users -- more than the population of the United States. This is outpacing Unicom's relatively paltry 1 million-plus for the same time.

Since Tietong is not listed, its financial data are not publicly available. From the release on its website, by the end of 2003, its total assets amounted to 43.1 billion, while China Netcom had 179.5 billion consolidated total assets and 74.4 billion company total assets and China Telecom had 305.6 billion consolidated total assets and 168.3 billion company total assets. Although Tietong’s network has not covered as large local network as China Netcom and China Telecom, it has covered all the area close to national railway network and almost all the business areas and major residential areas.

China Mobile (CHL), the largest telecommunication operator in China, enjoys the advantages of monopoly power, higher network coverage than its competitor China Unicom, strong customer loyalty and new customer acquisition abilities. In the near future, China telecommunication industry is expected to reform. The most likely restructuring plan would be that China Mobile (CHL) merges with the national railway's fixed-line unit, China Tietong. China Unicom's (CHU) GSM mobile business joins with China Netcom Group while China Telecom Corp (CHA), the country's top fixed-line operator, acquires Unicom's CDMA mobile telephone business

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.

1:00 pm : The major indices are trading near their best levels of the session after a broad-based rebound. Baidu.com Inc. (BIDU) came back especially strong lifing the China NASDAQ ADR Index or CQI. China's solar companies are showing some strength, JA Solar Holdings Co. (JASO) and China Sunergy Co. (CSUN) in particular.

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.