Good morning. Chinese companies that dropped the most came back strong this morning. This comes as a no surprise after Hong Kong edged higher and index futures pointed to a higher open. Altogether I think we will see insignificant volume until Thursday when the House votes again on a revised bill. If that passes, we're up to a sizeable rally. If fails, I don't know. It better passes the second time.

No comment... Landslide... Among Top 10 China ADR only two managed not to fall. Everywhere else it's red.

Chinese ADRs indulge in a sizeable plunge along the DJIA. TOMO - an ex-ticker for Tom Online is the only green on the screen. All Chinese ADRs are on the retreat as global money flows are exiting Asia and other foreign markets to find safety in U.S. T-bills and related safe havens.

Chinese ADR trading was not much fun this week. While the S&P 500 dropped 3.4% for the week and is down -18.0% year-to-date (YTD), Chinese shares in Hong Kong are worse; The Hang Seng Index lost 3.3% the week but is down -31.7% YTD. No wonder, Chinese shares lifted in American exchanges suffered, too. The problem is not so much with Asia and with China in particular but with global capital flows. Investors are moving into safe havens abandoning positions in foreign markets- crumbling the value of those shares. China is no exception. And just to illustrate how bad things are, WaMu just went under while rumors that Wachovia is next makes my stomach sick.

从筹资额看，2005年香港新上市中国公司的总筹资额最多，占到中国公司海外IPO总筹资额的93%，其次是美国，占据总筹资额的5%，新加坡新上市的中国公司筹资总额最小，仅占2%的份额(图2-5)。至于在三地市场新上市的中国公司的平均单笔筹资额，同样是香港排名第一，美国第二，新加坡第三。这和2004年的情况有所不同，2004年在三地新上市公司的筹资总额分别为69.9亿美元、35.73亿美元、5.89亿美元，平均单笔新上市筹资额分别为1.63亿美元、3.57亿美元、0.19亿美元。从以上数据可以看出，美国资本市场汇聚的投资资金最多，大规模的筹资往往需要到美国市场挂牌这种情况现在已经开始改变，建行就是一个极好的例子。2005年在全球IPO持续增长的环境下，建行打破了大型IPO通常在美国上市的惯例，成为五年来全球最大的IPO，其超过92亿美元的集资额打破了香港证券市场有史以来单一IPO集资额的最高纪录。在建行等几家大型海外上市国有企业强有力的拉动下，2005年中国企业海外IPO的总筹资额比2004年增长了90%，达到212.3亿美元。

Another tumultuous week and drama. When last Wednesday Wall Street got wracked before the $700 billion plus rescue package I thought we hit bottom. But as events unfold, we may see more drama to come. Keeping a calm today is difficult since I'm an economist. It's difficult to see that some put the our economy on the line for some presumed political gains. And while we're waiting for the bail out plan to eventually pass- Bush's plan or another - our economic system is falling apart. WaMu today. Who's next? How long are we gaing to wait? I hope we do it before it's too late.

题 目：（中文）中国企业海外上市经营绩效 变化分析

A new restructuring scheme of telecommunications was announced on 23rd May 2008. As the proposal says, the basic telecom service of Chinasatcom is incorporated into CHA and the latter one purchases CHU’s CDMA (including capital and business) by RMB 110 billion; CHU mergers with CN by stock - 1 CN share by 1.508 CHU share and 1 CN ADR by 3.016 CHU ADR; CHL consolidates with Chinatietong. Briefly speaking, the number of telecommunications service providers in China will be reduced from six to just three and only CHL, CHA and CHU exist.

Solarfun published a sound Q2 report on Wednesday. By June 2008, Solarfun reported revenue reaches US$ 197.1 million, which increase by 12.7% on quarter-over-quarter (QoQ) basis and 192.2% on year-over-year (YoY) basis. Although current stock market does not perform well due to the high inflation global economics, we still recommend investors holding this stock. As green energy supplier, Solarfun owns its born advantage given current unfavorable energy market. Besides, through objective and rational analysis on current capital market, we believe that behind systematic risk in global market, values for individual stock needs to be emphasized and analyzed from specific angles and be considered within long term time horizon.

Wall Street failed to gain traction as the DJIA shed another 161.52 points to finish at 10,854.17. As investors digested the bail out plan and weighted down large caps, Chinese ADRs could not escape the fray. The market cap weighted China ADR Index (CAI) lost 28.42 points today and is down 37.50% YTD. Smaller cap NASDAQ listed China stocks did much better, shedding only 18.19 points. The China NASDAQ Index (CQI) is down 24.92% YTD.

China stocks are on the retreat along the U.S. Here are the headlines before the market opens: China shares retreat after 2-day rally HK shares drop 4 pct on US concern; Mengniu dives China should consider more Wall Street buys Microsoft cuts prices in China to fight piracy PetroChina's parent buys back shares, pledges more

The Ctrip.com International Ltd. has continued to lead the travel service industry in China with its special combination of traditional and online methods. Strong revenue and net income growth was generated through effective cost control and excellent management. Strong economy and further improvement of the internet service in China has created strong demand for Ctrip's service thus bringing a promising outlook for both the industry and the company. Total revenue for Ctrip increased 53.7% in 2007 on a year-to-year basis and gross margin was as high as 77.3%. While net income increased 65.4% with a net profit margin of 33.2%. On the other hand, costs were effectively controlled to support its significant growth. Operating expenses were kept nearly consistent at 66% of total revenue during the period from 2003 to 2007.

It's 11:00 A.M. on Monday and is a good time to take a deep breath and see what lays ahead today's trading for Chinese ADRs. For starters, energy pulled the broad Hang Seng Index up 1.6% after Friday's record 9.2% rally. Petrochina (PTR) had a strong showing closing 5.1% higher on the back of strong oil. So today's gain of $2.44 on the NYSE comes as no surprise. Aluminum Corp. of China (ACH) is strong today on news that the company is not considering cutting additional production despite low aluminum prices.

What a week we had! We woke up on Monday to see Lehman go under along Merrill - though this latter was better off by selling herself to Bank of America. Then we learned that AIG may be next unless it can raise significant amount of capital ASAP. So Monday was a disaster.

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.

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.

Chinese ADRS crashed along the DJIA for the week. But there are some notable exceptions like E House (EJ), Comtech (COGO) or The9 Ltd (NCTY). We like Shanda (SNDA), another player from the Chinese online game landscape, and industry leader. Baidu.com (BIDU), China's search engine giant disappointed and solar companies were on a losing streak following strong showing in August. For detailed breakdown of the last week, please find table below.

DJIA lost 344.65 points yesterday, a plunge Chinese ADRs could not escape. Results of weak U.S. performance proved to be disastrous for Chinese equities listed on the NYSE and the NASDAQ. As the following picture demonstrates, the China NASDAQ Index (CQI) lost 46.5 points and is down 20.46% YTD.

The travel industry in China has experienced tremendous change during the recent years with traditional travel companies fading, losing appeals and market shares. Profits decreased sharply as competition became fierce so that companies had to cut their price dramatically to attract customers. On the contrary, new companies like Ctrip.com, eLong and Mangocity have drawn customers’ attention and thrived, representing a relative new industry was born. These companies brought internet and other high technology to their traditional call centers, integrated airline ticketing, hotel reservation and packaged tour together to attract a significant number of “middle class” and young people who do not want to join traditional tourist group but want to customize their tour and still benefit from the low costs. With the number of internet users and “white collar” workers increasing exponentially in China recent years, the potential of such travelling business is becoming remarkable. Despite China shows signs of slowing down, its economy is expected to increase at a considerable rate for the foreseeable future. The demand of such service is going to increase as people’s imposable income keeps rolling over and paid-holiday system keeps improving.

Solarfun published a sound Q2 report on Wednesday. By June 2008, Solarfun reported revenues reach US$ 197.1 million, which increase by 12.7% on quarter-over-quarter (QoQ) basis and 192.2% on year-over-year (YoY) basis. Although current stock market does not perform well due to the high inflation global economics, we still recommend investors holding this stock. As green energy supplier, Solarfun owns its born advantage in current unfavorable energy market. Besides, through objective and rational analysis at current capital market, we believe that behind systematic risk on global market, values for individual stock needs to be emphasized and analyzed from specific angles and be considered within long term time horizon.

Shares of Chinese companies listed in U.S. exchanges performed relatively well in July, spurring investor optimism. By term “relatively well” I mean compared to the DJIA or compared to previous months of the year. As the following chart tracking Chinese equities in Shanghai, Hong Kong and New York testifies, July was a comeback month for Chinese and American shares alike. The DJIA eked out a modest 2.1% gain for the month but the true beneficiaries were the U.S. listed Chinese equities. Looking at the performance of the China ADR Index in dark orange, the index gained an impressive 8.0% just in one month, closing in on the Hang Seng and the DJIA.

Most Chinese investors are increasingly turning bitter realizing that Olympics related hopes of a fast recovery of the stock market is fading away. But remember, we pointed out in our last Newsletter that Olympics related investment activity is tiny compared to the overall size of the economy and thus we don’t expect the Games to have a significant impact on equity markets. This projection turned to be true as the month of August passed away without any significant change in the direction of the Shanghai Composite Index or the China ADR Index. But solar companies rallied all over the board in August thanks to robust earnings. As the following table of Chinese ADRs sums it up, the best three stocks for aug 2008 were from the solar sector: Suntech (STP), Trina Solar (TSL) and Solar Fun (SOLF).