As widely predicted, yesterday was a bloodbath. The Dow fell over 500 points - some historians will put this into perspective - and Chinese ADRs fell just as hard. One company that looks good for today is China's largest independent power generator: Hunaneg Power (HNP). Falling energy prices help HNP to get back to the black and based on preliminary calculation HNP is getting there. Actually HNP is the only company that looks better than last week - using our Overbought/Oversold indicator. And here is a snapshot of yesterday's China stock landscape.

Here is the map of today's bloodbath. As predicted, CNOOC Ltd. (CEO) is hit the hardest - ADR lost $7.35 by mid afternoon. As we predicted in the morning before the bell, Chinese solar companies plunged, too. We argued that the sector is considered risky based on trading characteristics - and the fall of TSL, SDK and JASO clearly underlines our uneasiness of the sector.

Another weekend of fast action. Lehman goes under along Merrill, AIG seeks capital. Bank of America's take over of Merrill feels somewhat better to me. Freddie and Fannie government takeover is still fresh - one may ask: where are we heading? Or when it comes to Chinese equities, where is the bottom? Finding clues where Chinese stocks are heading today from Asian trading is not going to work. Public holiday closed down China's main exchanges on Monday. Chinese share listed in Shanghai are already at 22 months lows while Hong Kong listed H-shares are not much better but today's crash in DJIA futures hasn't shown in Asian trading.

The following table sums up weekly performance ranking of U.S.-Listed Chinese Stocks (9/5/2008-9/12/2008). Huaneng Power (HNP), China's largest independent power producer, tops the list by a 9.9 percent showing. 51job Inc. (JOBS) is next, a technical rebounce following a 25% dive after reporting worse than expected 2008 Q2 results on Aug 7. On the bottom of the list we have four small cap NASDAQ listed Chinese ADRs. As fundamentals come back to play in a bear market, low quality earnings and slow growth prospect hurt small cap Chinese ADRs even more.

The paper introduces the situation of Chinese enterprises listed overseas from 2003 to 2005. A comparison of the characteristics of three major listing places - HK, US and Singapore - is made at beginning, in terms of the number of equities listed, the amount of capital raised, P/E ratio, the character of the enterprises, refinancing, liquidity, cost, etc.. For the US market, the thing is there was 8 IPO in 2005 and $1.144 billion was raised. Most of the equities were in the industry of communication and IT. It took a relatively shorter time for enterprises to be listed, but with a higher cost. And the refinancing and liquidity of the equities was just okay.

Following our fundamental analysis two questions require additional insight: stock based compensation and cash vs. credit card use in air ticket bookings. Stock based compensation is important to asses because the company reported impressive net income growth without stock based compensation but we need to know how much this particular cost is to get a clear picture of the company's ongoing operations. We remember Sinovac (SVA), a small biotech firm, using U.S. equity markets to enrich employees by distributing raised capital via stock based compensation. In this extreme case cost of stock based compensation surpasses that of all SG&A if my memory serves me well. Long story short; we need to know the dynamics of this cost item because according to GAAP stock based compensation is just another cost item and should be incorporated into SG&A.

Quick outlook for Chinese ADR trading today. What we knew before, that Lehman's drag on the DJIA will have significant impact on Hong Kong and Asian trading, came as no surprise. As the saying goes " if the U.S. sneezes the world catches a cold" proved to hold true again. Hong Kong listed Chinese shares, H-shares, were on retreat as a result. The good news is that Shanghai listed Chinese shares, a market that is largely closed for global equity funds, was less effected by U.S. sentiment but rather took refuge in lower oil and high trade surplus news. Sinopec (SNP), Asia's largest refiner gained 1.34% in Shanghai (SHA:600028) while it fell 3.58% in Hong Kong (HKG:0386).

Concerns over Lehman sent the Dow nose-diving, erasing almost all of the gains from the previous session. Chinese ADRs couldn't escape the bloodbath tracking Wall Street all the way. Shares of Baidu.com (BIDU), China's premium search engine company, got hit the hardest shedding $20.25 followed by CNOOC Ltd.'s (CEO) $10.41 fall. China's oil sector fell along weakening oil prices, a surprise for Sinopec (SNP) and Petrochina (PTR). Shares of PTR and SNP used to move in opposite direction from oil. High price of crude sent these large refiners into the red so easing oil should help them and not hurt. However market sentiment overrode conventional wisdom and all Chinese oil majors got hurt, as a result.

Big market days are good for the use of technical indicators. This is when technical indicators come into play by visually representing where a stock is trading relative to her peers. So from this respect yesterday was a good day - lot of action on the NYSE and NASDAQ. Chinese ADRs got caught in the wind and traded actively. But just to see where they are relative to their trading characteristics, the following picture is worth a thousand words. They are all beaten and oversold. Take a look at China Eastern Airlines (CEA). The stock has come down a long way with no clear indication where the bottom is.

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.