As market sentiment erodes so do China stocks. The best performer of the day is The9 Ltd. (NCTY), this NASDAQ listed Chinese online game operator. The Company reported better-than-expected 2008 Q3 figures with sales and profits above analysts' estimates. The Shanghai based operator of the "World of Warcraft" reported net income more than doubled on strong subscriber accounts. Profitability of The9 Ltd. is limited due to licensing fee the Company is entitled to pay for its vendors. The most profitable among Chinese game operators are Shanda Interactive (SNDA) and Giant Interactive (GA) thanks to their home grown game portfolio.

On the negative side, Baidu.com (BIDU) continued to deteriorate following reports that the Company sold links to unqualified health care providers. The issue is very sensitive in China and may potentially undermine the long-term credibility of the Company.

The loser of the day in percentage terms is Ctrip.com (CTRP), China's largest online travel agency. The Company reported worse-than-expected 2008 Q3 numbers. Revenue growth slowed while expenses soared, leaving the company with an EPS of RMB 3.13 vs. RMB 3.58 last quarter or RMB 3.32 a year ago. The stock is down $3.89 or 16.4% today.

China's oil triumvirate is down following softening crude oil price. Price of oil lost another $.24 as we speak on concerns of global economic slowdown. Falling oil hurts oil producer CNOOC Ltd. (CEO) the most because CEO has no refining activity. Petrochina (PTR), China's largest oil producer with significant refining capacity lost $1.84 while Sinopec (SNP), Asia's largest refiner is down $3.81 or 6.68% for the day. China's oil refiners get a boost from lower oil price as margins improve however oil consumption is falling as economic situation deteriorates, making Chinese oil companies less attractive.

 

Top 10 - Bottom 10 - China ADR			18-Nov-08	1:38pm
Name	Symbol	Price	Change	Change%
The9 Limited	NCTY	$13.50	$1.20	9.76%
Home Inns & Hotel	HMIN	$10.09	$0.64	6.77%
CHINA DIG TV HDG	STV	$5.82	$0.29	5.24%
City Telecom (H.K	CTEL	$2.58	$0.28	12.17%
AirMedia Group In	AMCN	$5.28	$0.27	5.39%
Focus Media Holdi	FMCN	$7.31	$0.21	2.96%
51job	JOBS	$6.69	$0.19	2.92%
Sohu.com Inc.	SOHU	$40.87	$0.17	0.42%
AMERICAN ORIENTL	AOB	$5.78	$0.16	2.85%
Linktone Ltd.	LTON	$0.85	$0.05	6.25%
SINOPEC SHANGHAI	SHI	$19.38	-$1.58	-7.54%
CHINA MOBILE LIMI	CHL	$41.72	-$1.74	-4.00%
PETROCHINA CO ADS	PTR	$71.02	-$1.84	-2.53%
TRINA SOLAR LTD A	TSL	$6.93	-$1.89	-21.43%
CHINA TELECOM CP	CHA	$34.18	-$2.08	-5.74%
CHINA LIFE INS CO	LFC	$37.70	-$2.84	-7.01%
CHINA PETRO & CHE	SNP	$53.19	-$3.81	-6.68%
Ctrip.com Interna	CTRP	$19.77	-$3.89	-16.44%
CNOOC LTD ADS	CEO	$71.69	-$4.05	-5.35%
Baidu.com	BIDU	$123.78	-$10.31	-7.69%

China shocked the world on Monday by announcing a staggering Yuan 4 billion ($586 billion) financial packaged aimed at bolstering domestic demand, a sort of "New Deal" in a Chinese edition. Much of the money is intended to develop infrastructure, agriculture, low cost housing and health care. The number is not only the second largest after our much debated $700 billion but represents 16% of China's total economic output in 2007. Now the question is this: what stocks will benefit?

The best answer comes from the market itself. We checked out the first week performance of all 42 Hang Seng components following Monday's announcement and found that Aluminum Corp. of China (CHALCO) is the best U.S. cross listed Chinese company to benefit from the stimulus. All U.S. listed Chinese companies are highlighted by a grey area.

Remember, Hong Kong is the primary market for mature Chinese companies that list in the U.S. Performance of American listings of those companies are tied to their performance in Hong Kong, so our choosing of the Hang Seng for such purpose makes perfect sense.

Hang Seng Components since $586 billion package
Name	Ticker	11/14/2008	11/10/2008	Change %
YUE YUEN IND	0551.HK	15.2	14.54	4.5%
CITIC PACIFIC	0267.HK	6.15	6.06	1.5%
CHALCO	2600.HK	3.47	3.45	0.6%
CATHAY PAC AIR	0293.HK	8.01	8.1	-1.1%
NEW WORLD DEV	0017.HK	6.85	6.96	-1.6%
LI & FUNG	0494.HK	14.24	14.6	-2.5%
CLP HOLDINGS	0002.HK	52.85	54.3	-2.7%
ESPRIT HOLDINGS	0330.HK	40	41.18	-2.9%
CHINA LIFE	2628.HK	21.85	22.5	-2.9%
WHARF HOLDINGS	0004.HK	16.62	17.26	-3.7%
HK ELECTRIC	0006.HK	42.8	44.75	-4.4%
CCB	0939.HK	4.14	4.34	-4.6%
HK & CHINA GAS	0003.HK	13.38	14.04	-4.7%
ICBC	1398.HK	3.75	3.94	-4.8%
BANK OF CHINA	3988.HK	2.14	2.25	-4.9%
CHINA MOBILE	0941.HK	68.05	71.8	-5.2%
PETROCHINA	0857.HK	5.83	6.19	-5.8%
SINOPEC CORP	0386.HK	4.58	4.9	-6.5%
MTR CORPORATION	0066.HK	16.66	17.9	-6.9%
CNOOC	0883.HK	6	6.5	-7.7%
BANKCOMM	3328.HK	4.53	4.91	-7.7%
PING AN	2318.HK	33.35	36.15	-7.7%
CHINA OVERSEAS	0688.HK	9.26	10.06	-8.0%
TENCENT	0700.HK	50.15	54.5	-8.0%
CHINA UNICOM	0762.HK	9.6	10.46	-8.2%
SWIRE PACIFIC A	0019.HK	47	51.5	-8.7%
COSCO PACIFIC	1199.HK	5.65	6.2	-8.9%
HENDERSON LAND	0012.HK	26.9	29.77	-9.6%
HSBC HOLDINGS	0005.HK	82.3	92.3	-10.8%
BOC HONG KONG	2388.HK	8.53	9.58	-11.0%
BANK OF E ASIA	0023.HK	14.8	16.68	-11.3%
CHINA MER HOLD	0144.HK	15.3	17.3	-11.6%
HANG LUNG PPT	0101.HK	15.4	17.42	-11.6%
FIH	2038.HK	2.39	2.72	-12.1%
SHK PPT	0016.HK	58.8	66.99	-12.2%
HANG SENG BANK	0011.HK	90.3	103	-12.3%
HKEX	0388.HK	65.5	76	-13.8%
CHINA SHENHUA	1088.HK	13.16	15.4	-14.5%
HUTCHISON	0013.HK	37.45	44	-14.9%
SINO LAND	0083.HK	6.04	7.18	-15.9%
CHINA RESOURCES	0291.HK	13.4	16	-16.3%
CHEUNG KONG	0001.HK	65.45	80	-18.2%

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This is the story for the day: Stocks sink on worries about housing, consumers The DJIA is down 268.50 points testing the 8600 level. If anyone had hopes that the Chinese stimulus package of $586 billion would bring change, today is the answer. Weak consumer sentiment, housing market woes weight on the markets sending shares to a tail spin. Looking at the China stock list on American stock exchanges the picture is far from rosy. Looking at the top ten China ADRs for the day only five of them are up and stocks like China Tech Faith (CNTF) is "lucky" just to loose $.02 - yet it's enough to be listed among top ten for the day.

Chinese shares had a bumpy road this week. While the Hang Seng Index in Hong Kong ended the week higher 2.0% the wide S&P 500 index lost -3.9%, sending most American listed Chinese ADRs in the red. Solarfun (SOLF), a mid sized Chinese solar company, came off very strong on Tuesday, November 4 on anticipation of a strong 2008 Q4 ahead. That gain carried over the rest of the week sending the stock 17.5% higher for the week. But when it comes to year-to-date (YTD) performance, SOLF is behind industry leader LDK or even Trina solar.

Extraordinary times. This comes in mind first when I’m looking back to the month of September. Extraordinary volatility, events and an outlook that’s still uncertain. October 2nd. may be a better time to find directions for the market following the vote in the House but for now we have to focus on past events. Looking at the chart tracking major indices in 2008 doesn’t make investors smile. The DJIA lost over 20% by September 29 though it came back 485 points on the 30th—the best day in six years. But make no mistake, the third quarter of this year was one of the worst for China stock investors since 2001.

Sinopec Corp. (SNP), Asia's largest refiner, reported 2008 third quarter and year-to-date (YTD) results today. For the third quarter net profit shrank 38.7% to $1,212.8 million while it dropped a stunning 63.7% to $2,576.8 million YTD. High crude price is responsible for such dramatic change because Chinese refiners can't pass over higher crude price to customers due to state controlled gas prices at the pump.

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

Australia's swift rate cut saved the day for Asia but Europe still got its woes dragging on markets. So what's the outlook for us today in the U.S.? Looking for clues from index futures isn't much of a help. While the S&P500 futures point to a higher open NASDAQ futures go the other way around. When I look at China ADRs, first thing hits me on my morning screen is this: Chinese companies listed in American exchanges are oversold to a point where they can only come back. Looking at moving averages, there is not a single Chinese stock that is above 20 day moving averages (DMA) not to mention above 50 DMA or 200 DMA.

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.