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Most risky China stock list

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beta_chart_629-tumbChinese stocks have been doing very good in 2009 so far. The Shanghai Composite Index <.SSEC> rose 1.6% on Monday to another record for 2009 and is just about to break through 3,000 points. The index is up 56% YTD making it the third best market in the world for 2009. The Hang Seng Index <.HSI>, a measure from Hong Kong, is up 24% YTD thanks to the strong performance of Chinese shares or H-shares. The Dow Jones Industrial Average (DJI) is still trying to make it to the black for 2009.

 

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With Chinese stocks outperforming so much the question arise: how risky Chinese stocks have become? One of the most common measure of risk is beta, or a stock's tendency to follow broad indices. In theory the higher the beta the more risky a stock. According to the following data, the most risky China stocks is Suntech Power Holdings Co. Ltd. (NYSE:STP) with a beta of 3.6. This means that when the stock market advanced 1%, Suntech rose 3.6 times of that. Also, when indices turn south, Suntech falls 3.6 times as fast.

The other extreme is The9 Ltd. (NASDAQ:NCTY) with a low beta measure of 0.65. So when the DJIA goes up 1% the NCTY advances only 0.65% and when the DJIA fell NCTY proved to be a stocks holdings its ground relatively well.

Huaneng Power has a beta of 0.99 or almost one. It means that Huaneng Power International (HKG:0902) (SHA:600011) (NYSE:HNP) is correlating with the overall market the best and is just as risky as owning Diamonds (DIA).

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Here is a list of China stocks on a risk scale. Note: some of your stocks might not show up on the scale either because they are too young like CYOU or due to extreme market performance like most solar stocks.

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