The Dramatic Decline in Investors’ Interest for Chinese Stocks

Until a few years ago Chinese stocks were hot and investors bid up the prices to astronomic levels. Then the party ended and most of these stocks came back to earth. In the U.S.,  most of the Chinese  IPOs that were floated at the peak of the China craze have performed poorly. A few have even been uncovered as frauds such as the Toronto-listed Sino-Forest  Corporation. The following chart shows the dramatic fall in the Shanghai Composite index:

Click to enlarge

 

Source: Allan Gray Asset Management, South Africa

As investors have re-rated Chinese stocks their P/E ratios have also fallen accordingly. The fall in P/E ratios over the past 10 years is shown in the chart below:

Source: Bloomberg BusinessWeek

Some interesting points from a quick review of the Chinese ADRs exchange-listed on the US markets:

 

The table below shows the YTD performance of the Chinese ADRs:

S.No.DR IssueTickerLast PriceYear-to-date % ChangeSector
1Xinhua Sports & EntertainmentXSELY$0.05-16.67%Media
2VisionChina MediaVISN$0.21-83.06%Media
3JA SolarJASO$0.63-52.99%Alternative Energy
4Mecox LaneMCOX$0.68-41.38%General Retailers
5Daqo New EnergyDQ$0.75-55.09%Chemicals
6Suntech PowerSTP$0.77-65.16%Alternative Energy
7Hanwha SolarOneHSOL$0.84-14.29%Alternative Energy
8Ossen InnovationOSN$0.853.66%Indust.Metals&Mining
9LDK SolarLDK$0.91-78.28%Alternative Energy
10AgriaGRO$0.97-6.73%Food Producers
11Ku6 MediaKUTV$1.10-8.33%Mobile Telecom.
12China SunergyCSUN$1.11-0.89%Alternative Energy
13ReneSolaSOL$1.15-24.84%Alternative Energy
14China Finance OnlineJRJC$1.20-25.93%Software&ComputerSvc
15China Techfaith Wireless CommunicationCNTF$1.21-32.78%Tech.Hardware&Equip.
16China Ming Yang Wind PowerMY US$1.26-44.49%Alternative Energy
17Camelot Information SystemsCIS$1.27-55.44%Software&ComputerSvc
18China Xiniya FashionXNY$1.29-35.18%Personal Goods
19Vimicro InternationalVIMC$1.35-6.25%Tech.Hardware&Equip.
20Yingli Green EnergyYGE$1.39-63.42%Alternative Energy
21IFM InvestmentsCTC$1.4559.34%Financial Services
22WSP HoldingsWH$1.50-28.91%Oil & Gas Producers
23Lentuo InternationalLAS$1.55-38.25%General Retailers
24Actions SemiconductorACTS$1.58-13.66%Tech.Hardware&Equip.
25Noah EducationNED$1.58-26.51%Leisure Goods
26China Nepstar Chain DrugstoreNPD$1.616.62%Food &Drug Retailers
27AirmediaAMCN$1.71-52.89%Media
28China HydroelectricCHC$1.7250.88%Electricity
29China New BorunBORN$1.75-44.09%Beverages
30SyswinSYSW$1.84100.00%Real Estate Inv&Serv
31Sky mobiMOBI$1.87-38.69%Software&ComputerSvc
32Kingtone Wirelessinfo SolutionKONE$2.15-30.65%Software&ComputerSvc
33Trina SolarTSL$2.32-65.27%Alternative Energy
34LinktoneLTON$2.37102.56%Mobile Telecom.
35AmbowAMBO$2.64-62.82%Support Services
36Zuoan FashionZA$2.75-33.73%Personal Goods
37China Zenix Auto InternationalZX$2.95-2.96%Automobiles & Parts
38Xinyuan Real EstateXIN$2.9970.86%Real Estate Inv&Serv
39The9NCTY$3.13-56.04%Leisure Goods
40Xueda EducationXUE$3.18-8.88%General Retailers
41Phoenix New MediaFENG$3.25-42.27%Media
42Shanda GamesGAME$3.26-16.62%Leisure Goods
43JinkoSolarJKS$3.33-33.40%Alternative Energy
44RenrenRENN$3.38-4.79%General Retailers
45Taomee HoldingsTAOM$3.43-25.76%Leisure Goods
46China Distance EducationDL$3.4960.83%General Retailers
47E-House (China)EJ$3.67-14.05%Real Estate Inv&Serv
48Le Gaga HoldingsGAGA$3.96-1.98%Food Producers
49BCD Semiconductor ManufacturingBCDS$3.97-0.25%Tech.Hardware&Equip.
50China Digital TV HoldingSTV$4.0929.02%Electron.&ElectricEq
51E-Commerce China DangdangDANG$4.09-7.05%General Retailers
52iSoftStoneISS$4.35-50.29%Software&ComputerSvc
53Concord Medical ServicesCCM$4.4036.22%HealthCareEquip.&Ser
54ATAATAI$4.41-41.20%General Retailers
55Charm CommunicationsCHRM$4.71-45.74%Media
56ChinaCacheCCIH$4.7718.95%Software&ComputerSvc
57Bona FilmBONA$5.0031.58%Media
58NetQin MobileNQ$5.17-1.90%Software&ComputerSvc
59Giant InteractiveGA$5.2127.70%Leisure Goods
60Jiayuan.comDATE$5.53-5.31%General Retailers
61China Nuokang Bio-PharmaceuticalNKBP$5.55101.09%Pharma. & Biotech.
62KongZhongKONG$5.5634.30%Mobile Telecom.
63Noah HoldingsNOAH$5.82-5.37%Financial Services
64ChinaEduCEDU$6.034.33%General Retailers
65BitautoBITA$6.5263.00%Media
66HiSoft Technology InternationalHSFT$6.82n/aSoftware&ComputerSvc
67CNInsureCISG$7.193.90%Nonlife Insurance
68Country Style Cooking RestaurantCCSC$7.501.76%Travel & Leisure
69ShangPharmaSHP$7.756.60%Pharma. & Biotech.
70Simcere PharmaceuticalSCR$7.85-16.49%Pharma. & Biotech.
71TAL EducationXRS$9.00-9.73%General Retailers
7221VianetVNET$9.291.53%Software&ComputerSvc
73Rda MicroelectronicsRDA$10.12-7.41%Tech.Hardware&Equip.
74Perfect WorldPWRD$10.15-3.06%Leisure Goods
75Aluminum Corporation of ChinaACH$10.58-2.04%Indust.Metals&Mining
76AutoNaviAMAP$11.3312.96%Tech.Hardware&Equip.
77VipshopVIPS$11.41n/aGeneral Retailers
787 Days GroupSVN$11.916.82%Travel & Leisure
793SBIOSSRX$13.0827.98%Pharma. & Biotech.
80Yanzhou Coal MiningYZC$14.44-31.92%Mining
81China UnicomCHU$14.68-30.53%Mobile Telecom.
82eLongLONG$15.342.06%Travel & Leisure
83WuXi PharmatechWX$15.8643.66%Pharma. & Biotech.
84Guangshen RailwayGSH$16.42-6.92%Travel & Leisure
85China LodgingHTHT$16.4315.70%Travel & Leisure
86China Eastern AirlinesCEA$16.99-4.34%Travel & Leisure
87Youku.comYOKU$17.028.62%Media
88Spreadtrum CommunicationsSPRD$17.48-16.28%Tech.Hardware&Equip.
89CTrip.com InternationalCTRP$17.58-24.87%Travel & Leisure
90SouFunSFUN$17.6420.82%Media
91New Oriental Education & TechnologyEDU$19.01-20.96%General Retailers
92China Southern AirlinesZNH$21.83-14.22%Travel & Leisure
93Changyou.comCYOU$22.76-1.26%Leisure Goods
94Qihoo 360 TechnologyQIHU$22.9846.46%Software&ComputerSvc
95Focus MediaFMCN$24.8427.45%Media
96Home Inns & Hotels ManagementHMIN$26.572.98%Travel & Leisure
97Sinopec Shanghai PetrochemicalSHI$28.87-12.73%Chemicals
98Huaneng Power InternationalHNP$32.2453.38%Electricity
99Mindray Medical InternationalMR$32.4126.40%HealthCareEquip.&Ser
100China Life InsuranceLFC$42.8015.77%Life Insurance
101NetEaseNTES$44.08-1.72%Software&ComputerSvc
102China TelecomCHA$53.25-6.79%Fixed Line Telecom.
10351jobJOBS$53.8828.47%Support Services
104China MobileCHL$54.7512.91%Mobile Telecom.
105BaiduBIDU$92.68-20.43%Software&ComputerSvc
106China Petroleum & ChemicalSNP$102.03-2.87%Oil & Gas Producers
107PetroChinaPTR$130.615.07%Oil & Gas Producers
108China National Offshore Oil-CNOOCCEO$206.7018.33%Oil & Gas Producers

Source: BNY Mellon

From an investment standpoint, investors can wait and monitor the Chinese equity markets. Though most the stocks look cheap at current prices, there has a leadership change in the country and investors may want to wait until next year before making any investment decisions.

Disclosure: No Positions

More on this topic (What's this?)
Chinese Stocks Hot: These Names Will Run
Asia-Pacific Demand To Help Sector Re-Balance
Read more on Investing in China at Wikinvest

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