Oil, natural gas, and coal are anything but fossils. Mother Nature was kind enough to compress various forms of carbon over centuries, millennia and eons into giant batteries called “formations” for our use. Their age may make them fossil fuels, but their usability and cost make them future fuels.

One day, alternative energy sources like wind, which we’ve used for hundreds of years, and solar, which we’ve used for thousands of years, may be focused and collected and priced to be competitive with oil, gas, and coal. But for the immediate future, any “subsidies” fossil fuel extraction companies realize in the form of depletion allowances, accelerated depreciation, etc. are more than offset by the massive taxes at the federal and state level that is levied upon their finished products – unlike alternative energy sources.

Sinopec (SHI) has cut back on costs and continued to expand during difficult economic conditions, the company is now well placed to increase profits over the next 12 months.

Curently trading at $40.89 per share, the Ebeling Heffenan short term target is $49 and in 2010 we expect the company to each new highs of $90 plus.

The complete list of Chinese ADRs traded on U.S. organized exchanges is listed below:

The American Chemical Society’s Chemical and Engineering News (C&EN) and ICIS Chemical Business magazine published their list of top global chemical companies recently. Let's review some of the stocks from this list in this post. The rankings are based on full-year 2008 results.

According to C&EN, sales for the Top 50 companies rose by 9.6% in 2008 to $892B as the price of oil soared to about $150 per barrel. The industry had a strong first three quarters with the fourth quarter among the worst the industry has ever seen. Some of the chemical companies that disappeared last year due to mergers include ICI of UK, Lyondell Chemical, Germany’s Hoechst and France-based Rhone-Poulenc.

Bromine and related chemical products are widely used in oil and gas exploration, papermaking and as industrial refrigeration chemicals, among other uses.

News reports over the past few weeks of two potential multi-billion dollar Chinese oil deals in Africa, and another significant gas-related acquisition in Kazakhstan, only further reinforces China’s insatiable appetite for energy.

Every country needs a few basic ingredients in order to achieve healthy, sustained economic growth.

• Reliable sources of energy.
• A modern, efficient infrastructure, consisting of a good road and rail system, reliable power grids and high-speed digital communications networks.

And if a country wants to be considered a “global economic powerhouse,” it’s nearly impossible for it to do so without these critical building blocks.

As of July 31, 2009, the S&P 500 Index and the Dow Jones Composite Index are up 10.97% and 2.47% respectively. But many of the ADR indices have gone up much higher. The Year-To-Date (YTD) performance of some of ADR indices are as follows:

• BNY Mellon ADR Index: 21.44%
• BNY Mellon Asia ADR Index: 27.54%
• BNY Mellon Dev Mkts ADR Index: 16.65%
• BNY Mellon Emg Mkts ADR Index: 43.22%
• BNY Mellon Europe ADR Index: 15.59%
• BNY Mellon Lat. Amer. ADR Index: 53.96%

So far this year, the developed markets are lagging the performance of emerging markets.

What Does the Company Do?

Actually it looks pretty interesting. Recon Technology provides computer software and hardware solutions to companies in the petroleum mining and extraction industry in China. The company engages in the sale and installation of hardware systems related to heating, maintenance, and processes customized for petroleum extraction.

IndexUniverse had an article up Monday about the rebalancing at Russell Investments that occurs every June and was just implemented for 2009. IU seemed most interested in the increasing presence of Chinese stocks.

The five largest stocks in the Russell Global Index (I'm not familiar with this one) in order are;

California’s budget troubles are not going away. Moody’s Investor Services warned the Golden State it faces a “multi-notch” downgrade to its credit rating if the legislature does not produce a budget that closes the $24.3 billion deficit. The state’s current A2 rating is the lowest rating for any state’s general obligation bonds.

Disclosure: Long ADXTF.PK

By Julian Murdoch

China oil consumption grew - yes grew - 4% during the month of April, according to a report by Platts. The amazing thing isn't the size of the growth, but that it occurred at all. After all, oil demand in China dropped 6% during the first quarter of the year.

• • •

Mobile/Wireless

• Alcatel-Lucent (ALU) has signed framework agreements for 2009 with China Mobile Ltd. (CHL) and China Telecommunications Corp. (CHA) valued at US$1 billion and US$700 million respectively, and come just a month after AlcaLu's W-CDMA contract with China Unicom Ltd. (CHU). Alcatel-Lucent's framework agreements include radio and core network equipment, IP service routers, backhaul technology, and application platforms, though the vendor couldn't break down the value of its framework deals by technology. This makes it the first non-Chinese vendor to complete the set, as neither Ericsson AB nor Nokia Siemens Networks currently supplies China Telecom with 3G-specific equipment, and Nortel Networks Ltd. is only active with China Telecom. Motorola Inc. (MOT) has engagements with both China Telecom and Unicom. It also makes Alcatel-Lucent potentially the strongest international vendor in the Chinese 3G market. According to analyst firm iSuppli Corp., ZTE Corp. (ZTCOF.PK) claimed it tops the 3G vendor table in China last month. Huawei Technologies Co. Ltd. is believed to be in second place, with Alcatel-Lucent a distant third. China's three giant carriers are expected to spend more than US$29 billion on building out their 3G networks.

I like to give actionable advice, and there will be some investing ideas and suggestions throughout this article. But let's look at the big picture first.

To an oil man, natural gas should be flared off or farmed out. Yes, of course, gas is an important resource. Perhaps Michael Fitzsimmons is right, and we should subsidize retail distribution of compressed natural gas (CNG) to power bulldozers, airplanes, motorcycles and lawn mowers. If enough people get behind an idea, there's nothing to stop a government mandate, no matter how nutty. Synthetic jet fuel? Zero emission hydrogen-powered cars? Carbon sequestration? Oil from algae farms? Uh, okay. Whatever pipedream miracle you can sell a Congressman makes equal sense if your purpose is to loot the public purse and pocket a subsidy, like GM or AIG or C.

It’s another Monday, and the financial news looks like this. AIG is supposed to get another $30 billion in bailout money, HSBC (HBC) has some more you know what write-offs, employment is looking worse than ever, Warren Buffett said he did “some dumb things” in 2008, Citigroup's (C) rescue plan may not be enough, dividend yields are getting slashed, and the USA recession seems to have no end in sight yet. Where do you put your money for a good return on investment with minimum risk in an environment like this? My answer, this week, is on the other side of the world.

Scanning the stock charts this Monday morning, I’ve zeroed in on a low-risk high-reward buy long trade on a big oil company in China. Last week oil prices fell about 1 percent with U.S. data showing the consumer sector shrank more than expected. On the other side of the world, I’m betting China’s oil demand will remain relatively high compared to the USA throughout this year, and increase more moving into future. If you’re a dividend buyer then you’ll be glad to hear this company is currently paying out a 5.39% yield.

Asia has the two most populous countries in the world - China and India. They are also the two largest emerging markets in the so-called BRIC countries. Some of the countries in Asia are showing signs of recovery. For example, the Shanghai Composite Index has grown by 27% year-to-date until last Friday due to the Chinese government’s efforts to stimulate the economy. A Marketwatch news report on Feb. 13 said “Loans extended by banks rose to a record 1.62 trillion yuan ($237 billion) in January, accelerating from 771.8 billion yuan issued in December, according to data released Thursday by the People’s Bank of China.”

In addition to China and India, the former “Asian Tigers” of Singapore, Taiwan, Hong Kong and South Korea are also in Asia. Singapore has become the new “Switzerland of Asia” due to its favorable status as an off-shore banking haven. Besides these countries, Japan, one of the top economies in the world, is also in Asia. The oil-rich Middle East countries hold some of the largest sovereign wealth funds in the world. On the political front, China is a communist country but follows a unique type of economic system called “Market Socialism”(a relatively capitalist market with communist political system). India is the largest democratic country in the world. Except Israel, most of the Middle Eastern countries are monarchies or dictatorships.

China North Eastern Petroleum (CNEH.OB) is a highly profitable low cost oil producer based in Harbin China. The company is part of the nascent private Chinese oil industry which was born about 5 years ago due to Chinese government deregulation of the sector, which was (and still is) mainly dominated by the Chinese majors such as PetroChina (PTR) and Sinopec (SHI).

The company business model is quite simple: the company leases and develops small proven oil fields from PetroChina for 20 years, against a royalty payment of 20% of the oil produced the first 10 years, and 40% of the oil produced the last 10 years.

Oil is down at $113 pre-market despite a new hurricane (chart thanks to Trader Mike).

That is fabulous news and, if that sticks through the day, it will be our best chance to turn this puppy around again.  Commodities in general are turning down on a rising dollar and declining global demand that is not going to be reversed just because Olympic driving restrictions have been lifted in Beijing.  Commodity investors have been operating in a very special fantasyland based on hope:  They hope for shortages, they hope for war, they hope for terrorism, they hope for natural disasters, they hope for price manipulation by OPEC or the US oil cartel or NYMEX crooks, and they hope that people are so dumb that they will continue to buy petroleum products no matter how outrageous the price gets.

With all the attention being focused on the 2008 Olympics in Beijing, investors are also refocusing on Chinese stocks. However, in order to reduce risk, investors prefer the stocks that pay dividends. These are the highest yielding stocks based in China.

• Yazhou Coal Mining (YZC) is involved in the mining, transportation, and sale of coal. The stock has a P/E of 3.27, a PEG of 2.21, and a yield of 7.7%.
• Huaneng Power International (HNP) is a regional electric utility. The stock has a PE of 10.67, a PEG of 3.34, and a yield of 6.0%.
• Aluminum Corp China (ACH) is in the business of bauxite mining, alumina refining, and aluminum smelting. The stock has a PE of 3.06, a PEG of 0.52, and a yield of 4.7%.
• Sinopec Shanghai (SHI) produces petroleum products, petrochemicals, and plastics. The stock has a PE of 44.23 and a yield of 4.0%.
• PetroChina Corp. (PTR) explores for and produces petroleum and natural gas. The stock has a PE of 12.08, a PEG of 0.84, and a yield of 3.7%.
• China Mobile Limited (CHL) is a mobile telecommunications company. The stock has a PE of 21.64 and a yield of 2.7%.
• China Telecom Corp. (CHA) is a provider of wireline telecommunications and broadband services. The stock has a P/E of 12.55, a PEG of 2.53, and a yield of 2.0%.
• China Petroleum & Chemical (SNP) is an integrated oil and gas, and chemical company. The stock has a P/E of 15.29, a PEG of 0.5, and a yield of 1.9%.
• China Life Insurance Co (LFC) is a provider of life insurance and annuities. The stock has a P/E of 7.78, a PEG of 0.19, and a yield of 1.6%.
• China Unicom Ltd (CHU) is an integrated telecommunications provider. The stock has a P/E of 18.76, a PEG of 1.54, and a yield of 1.4%.

For an Excel database of over 50 Chinese stocks that can be downloaded, changed and sorted, go to WallStreetNewsNetwork.com.