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.

Shanda is the largest online game company in China and currently manages more than 20 online games. Shanda's products range from massively multiplayer online role-playing games (MMORPGs) and casual games to the family entertainment platform and online game platform. In 2008 Q1 net revenue rose by 9.2% QoQ and operating income increased 11.9% QoQ. MMORPGs remained the most profitable line and generated approximately 81% of its quarterly revenue. In addition, revenue from casual games grew by 36.5% QoQ, partially due to the Chinese New Year and student holiday. Under the Come-Stay-Play (CSP) revenue model, Shanda’s active paying accounts (APA) have increased by 19.2% to 6.03 million, but at a low conversion rate of 8% (to paying customers). Meanwhile average monthly revenue per active paying account (ARPU) of MMORPGs decreased 10.10%. Also, Shanda has decided to delay the launch of Tianxia in consideration of the recent catastrophe in Sichuan. A further concern about the business model Shanda will apply to the launch of Tianxia brings more uncertainties about the game’s profitability. Looking at competition, there are nine major game operators in China at present with ever increasing competition. And just how strong competition remins, let's just take a look at operating and net margins of four large game operators: Shanda Internactive (SNDA), The9 Ltd (NCTY), NetEase Inc (NTES) and Giant Interactive (GA).

Wall Street saw better days then today. The DJIA is down over 300 points on high unemployment rate and record oil, approaching $150 a barrel. No wonder, shares of U.S. listed Chinese companies, or ADRs, follow suit measured by the broad China ADR Index or CAI. As the following table demonstrates, Chinese ADRs lost 3.41% today however there is a significant difference between NYSE and NASDAQ listed ADRs. While index heavy NYSE listed China stocks lost ground, measured by the China NYSE Index (CYI), NASDAQ listed Chinese ADRs hold ground thanks to a superb performance of NetEase (NTES), The9 and some solar companies.

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.

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.

I knew this. AND I TOLD YOU! If you read two of my blogposts carefully, you would have got the message: DON'T TOUCH IT!

I have been following Chinese ADRs (U.S. listed Chinese companies) for a long time to realize a change in the dynamics of new IPOs. Investors have to be very selective when it comes to Chines IPOs, especially that high quality Chinese companies seems to choose Hong Kong and Shanghai lately.

Giant Interactive is coming to the NYSE. Lessons learned from IPOs of JOBS, SNDA and BIDU.