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%.

Estimates are re-do going with following assumptions: 1. Sales growth rate at 32% per 3 months. This rate is derived from corresponding increasing rate in 2007. 2. Profit margin is set at 6%, which is the same as that for the second quarter 2008. Be honest, I incline to make this assumption conservative for that I think if this company doesn't do any improvement at its management, its profitability could not be improved!

The latest quarterly report from STP (ending 20/06/08) displays a strong revenue growth from $434,514 thousand to $480,179 thousand, or 10.51% (9.3% for last Quarter). According to the market information , majority of analysts believe such favorable result may be attributed to following factors:

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.

Another sad day. Landscape of the bloodbath... Reading of Chinese ADRs right before 2:00 P.M.

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.