Investing in Emerging Equity Markets: The Case of Chinese ADRs versus B Shares

Ursel, Nancy; Xiaohua Lin; Li, Jessica
September 2006
Multinational Business Review (St. Louis University);Fall2006, Vol. 14 Issue 2, p83
Academic Journal
Chinese companies have recently started listing ADRs in North American stock exchanges and thus offered an alternative venue for Western investors whose access to the Chinese market has largely been limited to the illiquid B shares. Are ADRs a good substitute for investing in Chinese B Shares? We examine characteristics of return distributions for indices of Chinese shares and an index of Chinese ADRs. We also compare efficient frontiers for portfolios including Chinese shares and Chinese ADRs and compute possible portfolio allocations. We find that investing in Chinese ADRs does not provide a risk/return tradeoff similar to direct investment in Chinese stock exchanges.


Related Articles

  • Takeover motives in a weak regulatory environment surrounding a market shock: a case study of New Zealand with a comparison of Gondhalekar and Bhagwat’s (2003) US findings. Anderson, Hamish; Marshall, Ben // Review of Quantitative Finance & Accounting;Jul2007, Vol. 29 Issue 1, p53 

    We examine the motives for takeovers in New Zealand surrounding the 1987 stock market crash and compare with the US findings of Gondhalekar and Bhagwat (). There are a number of structural differences between the New Zealand and US markets that could impact on merger motives. Compared with the...

  • ASPECTS REGARDING THE THEORY OF EFFICIENT MARKETS. Radu, Despa; Cristina, Coculescu; Ovidiu, Folcut // Annals of the University of Oradea, Economic Science Series;2008, Vol. 17 Issue 1, p91 

    From the beginning of the XX century, in a theoretical paper regarding stock speculation, Louis Bachelier shows that the prices of goods on the stock market fallow a random movement, drawing, from here the conclusion that speculation is an actual game, meaning that neither the buyers or the...

  • WHAT SHOULD WE KNOW ABOUT MOMENTUM STRATEGIES? THE CASE OF THE TUNISIAN STOCK MARKET. Wyème, Ben Mrad Douagi Fatma; Olfa, Chaouachi // Journal of Business Studies Quarterly;2011, Vol. 3 Issue 1, p218 

    In this paper, we examine the profitability of various momentum strategies in the Tunisian stock market over the period April 2003 to March 2010. Also, we verify the stability of momentum return in time. Furthermore, we test for possible seasonality in the momentum profit, and then, we assess...

  • Testing for Nonlinear Trend-Reversion in the Stock Prices of the G7 Countries. Shirvani, Hassan; Mirshab, Bahman; Delcoure, Natalya // International Review of Applied Financial Issues & Economics;Dec2010, Vol. 2 Issue 4, p611 

    Paper examines the empirical validity of the efficient market hypothesis (EMH) in the G7 countries by testing the null hypothesis of a unit root in the stock prices of these countries against two distinct alternatives. Against the alternative of stationarity around a linear trend, the standard...

  • Discussion of “Investor recognition and stock returns”. Bartov, Eli // Review of Accounting Studies;Sep2008, Vol. 13 Issue 2/3, p362 

    Lehavy and Sloan (, Review of Accounting Studies) note that prior studies find that earnings and cash flows explain only a small portion of the cross-sectional variation in stock return. This motivates them to investigate empirically the ability of a behavioral model of capital market...

  • Momentum Yatırım Stratejisinin Karlılığının Ä°MKB’de Test Edilmesi. Kandir, Serkan yılmaz; Inan, Halime // Journal of BRSA Banking & Financial Markets;2011, Vol. 5 Issue 2, p51 

    Aim of this study is to investigate profitability of momentum investment strategy in ISE. Sample of the study consists of the stocks traded in National Market of ISE from July 2000 to June 2010. We use 3, 6, 9, 12 month holding and testing periods. Performance of momentum strategy is tested by...

  • Capital Market Efficiency: Evidence from Pakistan. Tahir, Amna // Interdisciplinary Journal of Contemporary Research in Business;Dec2011, Vol. 3 Issue 8, p947 

    The paper provides evidence on the weak form of efficiency in Pakistani stock market. The predictability of stock prices using historical data is tested by employing unit root test, runs test and autoregressive integrated moving average (ARIMA) on twenty companies from the Karachi stock...

  • "Rational" or "Intuitive": Are Behavioral Biases Correlated Across Stock Market Investors? Kudryavtsev, Andrey; Cohen, Gil; Hon-Snir, Shlomit // Contemporary Economics;2013, Vol. 7 Issue 2, p31 

    Human judgments are systematically affected by various biases and distortions. The main goal of our study is to analyze the effects of five well-documented behavioral biases--namely, the disposition effect, herd behavior, availability heuristic, gambler's fallacy and hot hand fallacy--on the...

  • Development of stock market pricing in Central and Eastern Europe through two decades after the transition. Bóta, Gábor; Ormos, Mihály // Empirica;Nov2015, Vol. 42 Issue 4, p685 

    In this paper we investigate the development of capital market pricing in six Central and Eastern European (CEE) post-communist countries (the Czech Republic, Estonia, Hungary, Poland, Romania and Slovakia) in the two decades after the change of regime. To make the results for these markets...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics