A Tale of Two Chinas from Bespoke

jamesmith

A Tale of Two Chinas
WEDNESDAY, OCTOBER 6, 2010 AT 05:06PM
With a decline of 18.9% YTD and a loss of more than 21% from its 52-week high, the bear market in China's Shanghai Composite Index has been well documented.  However, while locally listed shares of Chinese stocks have been in a slump, their counterparts listed in the USA as ADRs have followed an entirely different path.

The chart below compares the performance of the Shanghai Composite Index to a basket of US listed Chinese ADRs since the start of 2009.  In order to be included in the basket of ADRs, each stock had to have a market cap of more than $250 million at the start of 2009.  Throughout much of 2009, both the Shanghai Composite and our basket of ADRs saw similar rallies, but from there the paths began to diverge.  A little more than one year later, our basket of ADRs is once again above the level it was at when the Shanghai Composite peaked, while the Shanghai Composite languishes near its lows for the year.