I have a feeling that way too many investors don't understand how much Wall Street influences China ADR prices. Many say "I don't understand what U.S. subprime problem's got to do with China Mobile" They are right in their own turf but as the following two charts demonstrate, Wall Street has a tremendous impact on Hong Kong trading. On the contrary, Hong Kong trading has a negligible impact on the Street. And as you may know, China ADRs trading on U.S. exchanges follow Hong Kong prices. So you really should look into what moves Hong Kong.

Regarding the current plunge, we have to live with market volatility as was addressed in the "Strong stomach needed" article in the August 2007 Newsletter. So for me, Chinese shares shine when U.S. related news drag them down. They say: BUY NOW.

China stocks post biggest weekly loss in a decade: China's main stock index closed Friday with a weekly loss of 8 percent, its biggest weekly drop since May 1997. Chinese ADR portfolio was just as bad with no clear indication where the bottom is. Look up from the table below how your Chinese stocks did.

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.

China computer game developers have been working for foreign game developers to make a living for a long time. However, several years of hard working and accumulated know-how eventually brought about a significant change. Numerous domestic developers have started to spring out based on self-innovation. In-house, self-developed games already account for 64.8% market share of the Chinese online game industry.

Days like this offer great trading opportunity for the intelligent investor. For one, U.S. markets are shaky and for two, Beijing has told asset managers preparing to launch overseas stock investment funds to cut their exposure to Hong Kong. Bad combination for the market but great for the smart trader.

Look out world, here comes China and Shanghai, in particular. 4,000 skyscrapers, great modern technology, 20+ million people and more.

The last trading day of September was a happy one. Our favorite proxy for the overall China ADR* universe, the iShares FTSE/Xinhua China 25 Index (FXI), closed at $180.00 marking an exact 20% run over the month. What makes this rally even more remarkable is the strong underlying volume. We know that Hong Kong is the home market for the most prominent FXI components. So we found comfort in the news that Hong Kong blue chips rose 0.3 percent amid unprecedented volume on Friday, September 28th, closing out the quarter with their best gain since the end of 1999. The Hang Seng Index gained 13.6 percent for the month and 24.7 percent for the three months ended in September.