Chinese ADRs Still Hanging In There
Tuesday, March 16, 2010 at 01:43PM While the Shanghai Composite index has been struggling relative to the S&P 500, ADRs of Chinese companies listed in the US have been performing much better. In the chart below, we compared the performance of the Shanghai Composite and a basket of US listed Chinese ADRs with market caps of $250 mln or more. Since the start of 2009, the Shanghai Composite index is up 64.4%. Our basket of Chinese ADRs, however, is up 106%. Last August, both the Shanghai Composite and our basket of ADRs reached a short term peak and then corrected. In the ensuing rebound, ADRs powered ahead to new highs, while the Shanghai Composite saw an anemic rally and has been unable to eclipse its August peak. Investors have long looked for ways to gain direct exposure to the Chinese domestic stock market since domestically listed shares have been closed to outside investors. Judging by the recent returns of Chinese ADRs, however, investors may have a much simpler and more attractive alternative.
Reader Comments (2)
Where are the arbitrageurs?
So... maybe the outperformance of ADRs relative to the Shanghai indicates that investing in China is a sucker's game right now, populated by far too many retail investors chasing last year's performers, while August 09 saw all the smart money get out of China?