China ADRs: A Review Of Year-To-Date Returns

Chinese equities have plunged dramatically in the past few weeks. From being the top performer among emerging markets, the China equity market has entered the bear market with a fall of over 28% in the Shanghai Composite Index from this year’s peak. Despite the decline, the index is still up by just over 15% year-to-date.

Investors may want to consider the following points before investing in China:

  • The Chinese equity market rose more than 100% in the past 12 months even though economic growth was sluggish. Many individual stocks more than doubled or shot up more.
  • Unlike other emerging countries such as Brazil and India, retail domestic investors are the cause of the boom. Foreigners do not play a major role in China since the country has strong restrictions on foreign equity investors investing in the local market. According to one report, more than 90 million individual investors make up about 80% of the market.

From an article in the BBC:

  • Herd mentality

About 80% of investors on the Chinese mainland’s stock markets are small retail investors – or so-called mum and dad investors. Investing – and talking about their shares – is a national pastime for millions. And many have admitted that they are driven by what their friends and family are doing. “Retail traders are by their nature enthused by momentum,” says market specialist Chris Weston from IG Markets. “If the market is rallying, they feel like they need to be involved on fear of missing out. That momentum is now headed sharply lower and so they want out.”

  • Millions of individual investors opened brokerage accounts in the past year as the market soared. These inexperienced investors do not have the resources or the ability to ride out market volatility.

From Fuelled by greed, Shanghai’s stock market is a raging ox in Global Times in June:

In April, both of China’s two exchanges saw nearly 5 million new A-share accounts opened. In Shanghai especially, the passion for investing in the stock market is at an all-time high, and the greed that has overcome ordinary residents here is almost palpable.

Just a few floors downstairs from the Global Times, where a securities company happens to have an office, a high-spirited stream of retirees can be seen making punctual visits throughout the day to cash in on their portfolios or reinvest in new offerings. It’s comical to picture these gossiping grannies sitting in the doorways of their longtang debating the valuation of 1818-SZ or whether to hold or sell ICBC, but that’s exactly what’s occurring.

On morning metro commutes, nobody is playing Fantasy Westward Journey anymore; now the new trendy game is SSE. The faces of nearly every other passenger glow green and red from the real-time stock tickers on their tablet devices.

Every morning at People’s Square, near the Shenwan Hongyuan Securities office, droves of locals can be seen expounding investing advice and whispering supposedly “insider” secrets to each other. Though many of their claims are dubious, gauging from the animated atmosphere, trading stocks has become the city’s new obsession.

After many years of stagnation, the sudden reversal of fortune of the Chinese stock market sent everyone scrambling. Everyone was afraid of missing out on the next golden opportunity. Even people with absolutely no prior investing experience – or sufficient savings to spend – did not hesitate to get in on the latest hot stock.

A classmate of mine, who spent all her savings on a new apartment, recently borrowed an additional 100,000 yuan to invest in the market. On Thursday, when the Shanghai exchange plunged 6.5 percent, she lost 7,000 yuan in the blink of an eye.

China’s stock market is notoriously volatile, but over-confident new investors seem to be ignoring the potentially high risks. A friend’s colleague just sold his apartment for 300,000 yuan less than the market price so he could come up with the cash to make a “sure thing” investment.

  • Some 1,301 companies have been halted from trading on the mainland exchanges and IPOs have been suspended. In addition, the government is taking many other steps to halt the slide. Most likely such measures will fail.

Following the performance of common stocks listed on the mainland market, China ADRs trading on the US markets also declined today as investors dumped them in droves. Hot stocks such as Alibaba(BABA) plunged to their lowest level since the IPO a few months ago. BABA is down over 23% so far this year.

The table below shows the year-to-date returns of exchange-listed Chinese ADRs:

S.No.CompanyTickerPrice as of July 7, 2015Year-To-Date Change (%)Industry
2500.comWBAI$17.883.05%Leisure Goods
351jobJOBS$33.05-7.81%Support Services
5AcornATV$0.91-45.83%General Retailers
6Actions SemiconductorACTS$1.44-25.77%Tech.Hardware&Equip.
7AgriaGRO$1.4217.36%Food Producers
9Alibaba Group Holding LimitedBABA$79.62-23.40%General Retailers
10Aluminum Corporation of ChinaACH$9.86-14.41%Indust.Metals&Mining
11ATAATAI$4.9012.39%General Retailers
12AutohomeATHM$43.8620.63%Automobiles & Parts
16Bona FilmBONA$10.3145.62%Media
18Cheetah MobileCMCM$22.1146.23%Software&ComputerSvc
19China Digital TV HoldingSTV$2.84-7.19%Electron.&ElectricEq
20China Distance EducationDL$14.26-13.00%General Retailers
21China Eastern AirlinesCEA$35.8247.77%Travel & Leisure
22China Finance OnlineJRJC$4.56-14.29%Software&ComputerSvc
23China Life InsuranceLFC$19.39-0.92%Life Insurance
24China LodgingHTHT$21.82-16.97%Travel & Leisure
25China Ming Yang Wind PowerMY US$2.294.57%Alternative Energy
26China MobileCHL$61.003.71%Mobile Telecom.
27China National Offshore Oil-CNOOCCEO$135.13-0.23%Oil & Gas Producers
28China Nepstar Chain DrugstoreNPD$1.9120.89%Food &Drug Retailers
29China New BorunBORN$1.07-16.41%Beverages
30China Petroleum & ChemicalSNP$80.99-0.02%Oil & Gas Producers
31China Southern AirlinesZNH$48.68103.68%Travel & Leisure
32China SunergyCSUN$1.5728.69%Alternative Energy
33China Techfaith Wireless CommunicationCNTF$1.03-8.04%Tech.Hardware&Equip.
34China TelecomCHA$54.48-7.20%Fixed Line Telecom.
35China UnicomCHU$14.366.77%Mobile Telecom.
36China Xiniya FashionXNY$1.85-16.29%Personal Goods
37China Zenix Auto InternationalZX$1.01-29.37%Automobiles & Parts
39CNInsureCISG$6.55-1.21%Nonlife Insurance
40Concord Medical ServicesCCM$5.99-6.55%HealthCareEquip.&Ser
41Country Style Cooking RestaurantCCSC$4.68-20.95%Food &Drug Retailers InternationalCTRP$71.1056.26%Travel & Leisure
43Daqo New EnergyDQ$18.42-30.07%Chemicals
44E-Commerce China DangdangDANG$6.68-28.09%General Retailers
45eHi Car Services LtdEHIC$13.0159.44%Automobiles & Parts
46E-House (China)EJ$5.41-25.28%Real Estate Inv&Serv
47eLongLONG$14.11-21.39%Travel & Leisure
48Guangshen RailwayGSH$22.13-8.29%Travel & Leisure
49Hanwha Q CellsHQCL$14.3130.09%Alternative Energy
50Homeinns HotelHMIN$29.36-2.20%Travel & Leisure
51Huaneng Power InternationalHNP$46.70-13.79%Electricity
52iDreamSky TechnologyDSKY$9.88-42.15%Software&ComputerSvc
53iKang Healthcare GroupKANG$15.633.92%HealthCareEquip.&Ser
54JA SolarJASO$7.02-14.29%Alternative Energy
55JD.comJD$30.6132.28%General Retailers
57JinkoSolarJKS$25.5229.48%Alternative Energy
58JumeiJMEI$17.6129.30%General Retailers
59Kingtone Wirelessinfo SolutionKONE$3.7853.66%Software&ComputerSvc
60KongZhongKZ$6.1413.49%Mobile Telecom.
61Ku6 MediaKUTV$0.76-24.00%Media
62Leju HoldingsLEJU$6.96-35.32%Real Estate Inv&Serv
63Lentuo InternationalLASLY$0.08-90.80%General Retailers
64LightInTheBoxLITB$4.02-36.09%General Retailers
65Mecox LaneMCOX$3.04-18.50%General Retailers
66Mindray Medical InternationalMR$25.45-3.60%HealthCareEquip.&Ser
67MOMO IncMOMO$13.9616.33%Software&ComputerSvc
69New Oriental Education & TechnologyEDU$23.1113.23%General Retailers
70Noah HoldingsNOAH$22.989.95%Financial Services
71NQ MobileNQ$3.78-3.32%Software&ComputerSvc
72Ossen InnovationOSN$1.0021.95%Indust.Metals&Mining
73Perfect WorldPWRD$19.2422.08%Leisure Goods
74PetroChinaPTR$106.70-3.84%Oil & Gas Producers
75Phoenix New MediaFENG$6.51-21.66%Media
76Qihoo 360 TechnologyQIHU$58.632.39%Software&ComputerSvc
77QunarQUNR$36.8729.69%Travel & Leisure
78ReneSolaSOL$1.33-5.67%Alternative Energy
79RenrenRENN$3.4537.45%General Retailers
80Shanda GamesGAME$6.076.87%Leisure Goods
81Sinopec Shanghai PetrochemicalSHI$39.0133.00%Chemicals
82Sky mobiMOBI$4.066.56%Software&ComputerSvc
83Sky Solar Holdings LtdSKYS$7.99-37.19%Alternative Energy
85Sungy MobileGOMO$4.14-17.03%Mobile Telecom.
86TAL EducationXRS$32.1814.56%General Retailers
87Taomee HoldingsTAOM$2.91-15.65%Leisure Goods
88TarenaTEDU$10.61-4.41%Support Services
90Trina SolarTSL$10.3411.66%Alternative Energy
91Tuniu CorpTOUR$15.5129.25%Travel & Leisure
92Vimicro InternationalVIMC$8.9950.08%Tech.Hardware&Equip.
93VipshopVIPS$20.525.02%General Retailers
94VisionChina MediaVISN$8.59-11.72%Media
95Weibo CorporationWB$13.40-5.90%Software&ComputerSvc
96Wowo LtdWOWO$6.17-40.01%Leisure Goods
97WuXi PharmatechWX$38.5914.61%Pharma. & Biotech.
98Xinyuan Real EstateXIN$2.9324.15%Real Estate Inv&Serv
99Xueda EducationXUE$2.9322.59%General Retailers
101Yanzhou Coal MiningYZC$6.13-27.28%Mining
102Yingli Green EnergyYGE$1.01-57.02%Alternative Energy
104YY Inc.YY$55.59-10.83%Media
105Zhaopin LTDZPIN$14.04-7.51%Software&ComputerSvc
106Zuoan FashionZA$3.341.83%Personal Goods

Source; BNY Mellon

About half of the ADRs shown above trade for under $10 per share.

The complete list of China ADRs including the ones trading on the OTC markets can be found here.

Disclosure: No Positions

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