BT’s still-credible R Sivanithy questioned today whether S Chips will go the way of Clob shares. That certainly sounds like it’s worth a PDT Notes treatment. Further, my cybercolleague Lionel over at Over The Hedge went on a China Milk screed this week.

Of course, there are some legitimate, honest companies among the 100 or so S-Chips, but uncertainty is contagious. See this chart below:

For each sector I have listed the number of China based firms vs the number of non-China based firms, so (26 v 88) means 26 Chinese firms and 88 nonChinese firms. The effect has hit every sector basically uniformly.

However, confounding the  debate, is that S-Chips tend to be significantly smaller than usual, making them vulnerable to the size effect we have observed here multiple times:

Standard academic procedure here dictates that I ought to normalize the Chinese firms for the size effect and then ...