Chinese ADRs Are in Red Despite Strong Mainland Performance

As shown in the chart of China's Shanghai Composite, the index recently held its long-term uptrend, made a double bottom, and broke its short-term downtrend.

click to enlarge

While Chinese equity markets have held up well and are up for the year, many Chinese ADRs trading on U.S. exchanges have been hit hard. As shown, CSUN is down 26%, GRRF is down 19.5%, CNTF is down 19% and TSL is down 18.6%. Currently, 72% of the Chinese ADRs that we track are down for the year. Have these ADRs been unjustly punished because they are trading on U.S. exchanges?

Comments

[jaytrade:]

Yes, I think Chinese ADRs are getting hit unfairly here. The American big boys are making fortunes from China connection, and as soon as the small investors tries to make a few bucks from action, stocks go down here unnaturally here. No woder that a lot of people think that the Wall St is full of crooks !!!

I have been following LDK, an ADR in the solar sector.I am sorry to say that I feel if LDK were an US company, it's stock would have performed much better. I feel that a lot of US analysts, including some, whom I really admire, show a negative bias against Chinese stocks. And this kind of negative psychology, supported by a couple of "blown out of proportions" issues have created unfair turbulence around the stock price.
I myself would like to see some protectionist measures to support our ailing industries here, but not this way. I hate to see our big boys here selling out our industrial manufacturing muscle to foreign countries, in the name of globalization, and for huge profits for only a handful, while most of the country suffers.
But thousands of US citizens make investments in Chinese ADRs, and deserve fair treatments.

2008 Jan 12 10:36 AM