A note on the performance of Chinese American Depository Receipts

Abstract

In this note, New York Stock Exchange-listed American Depository Receipts (ADRs) from China are examined to determine overall investment performance for the first 3 years of trading. The segmented results show that while Chinese ADRs perform roughly the same as the S&P 500 Index, those trading during the bull market under-performed the market index by over 26% while those trading through the bear market (listed after 1 January 1998) outperformed the S&P 500 by nearly 40%. Furthermore, issues from Hong Kong under-performed the S&P Index by nearly 73% while those issued from other areas of China exceeded the index by over 29%. These results provide evidence that market timing and regional issues affect portfolio returns from Chinese ADRs.