Top China ADR Portal

China ADR stock research


Warning: strtotime(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone. in /home1/chinaves/public_html/libraries/joomla/utilities/date.php on line 56

Warning: date(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone. in /home1/chinaves/public_html/libraries/joomla/utilities/date.php on line 198

Shanghai hits new record, Chinese ADRs on NASDAQ still cheap! (UPDATE1)

E-mail Print PDF

wall_streetThe Shanghai Composite, the broadest measure of the Chinese domestic market, rose 0.9% on Friday to 2,880.49 setting a new record for 2009. The index is up 54.7% YTD and is up 64.7% since November 4, 2008. Valuations improved considerably since last November. Chinese A shares are trading now at 28.8 times earnings versus 12.9 just eight months ago. So the question is this: is a China bubble growing?

Shanghai_DJIA

 

Seasoned investors know that China ADRs (American Depository Receipts) don't follow the Shanghai Composite very closely, but are influenced by the overall American market sentiment. If anything, Hong Kong listed H shares of Chinese companies and ADRs are compatible. And if you think of the huge discrepancy between Shanghai and Hong Kong listed China shares, e.g. different valuations of the same company listed on two different exchanges, than you know that Shanghai is not the best barometer that American investors should look at.

Just a quick example: shares of Huaneng Power (NYSE:HNP) sells for Yuan 7.52 in Shanghai (SHA:600011) but is only $HK5.38 (Yuan 4.7476) in Hong Kong (HKG:0902). Same company same shares. And if you draw a chart between 0902.HK and HNP, it become obvious that Hong Kong is the benchmark for American investors to look at.

Now the question western investors should ask is this: are my Chinese ADRs overvalued? Is there a bubble growing?

The answer lies in the following two charts. At Chinavestor we separated NYSE and NASDAQ listed Chinese stocks since they have different stock characteristics. This gives investors a better visibility deciding when and what stocks to focus on.

China_NYSE_6118

As the NYSE listed China stocks price/PE chart proves, the resurgence in China stocks are in line with improved earnings. All the gains registered in your stocks are underlined with strong earnings, so here is no bubble at all.

 

China_NASDAQ_618

According to the NASDAQ listed China stocks price/earnings chart above, NASDAQ listed Chinese ADRs are CHEAP! While their stock price improved considerably since 3/2/2009, their P/E ratio remained intact. Think of NASDAQ China Index heavy weights, Baidu.com(NASDAQ:BIDU), NetEase (NASDAQ:NTES) and Shanda (NADAQ:SNDA). These three companies make up well over 50% of the cap weighted index. Bidu went from $137.22 to $295.92 from 3/2/09 to 7/17/09. NetEase from $20.45 to $35.19 while Shanda from $30.76 to $53.58. Yet this was all justified by robust earnings.

So if you want to join the China stock wagon, pick up some NASDAQ listtings because this is there value lies right now.



If you like us, spread the word to the fellow investors on your favorite Social Bookmarking websites
Reddit! Del.icio.us! Mixx! Free and Open Source Software News Google! Live! Facebook! StumbleUpon! TwitThis Joomla Free PHP
 

!!! CHINAVESTOR.COM is for SALE !!!

BUY this domain with all its credentials. Chinavestor.com has been added to Google News and Finance since 2008! Huge web traffic upside potential! Website is optimized for Chinese stocks but can easily be tweaked. Contact Seller Here

sale1
G_news
Check out The Benefits of Getting into Google News!

Free weekly newsletter

Get hot China stock news every Monday