The CSI 500 Index, which tracks small-cap stocks listed in Shanghai and Shenzhen, now trades at 47 times reported earnings compared with 38 times in July while the Shanghai Composite Index (SHA:000001) trades at 18.3 times reported earnings, according to Bloomberg News.

The Claymore/AlphaShares China Small Cap ETF (NYSE:HAO) is up 8% in the past three months while the more large-cap focused iShares/FTSE Xinhua China 25 Index (NYSE:FXI) is flat.

Citic said, “Investors also need to beware of the risks of a sharper deceleration in profit growth in the third quarter," Bloomberg reported.

August 31, 2010 (Chinavestor) Shanghai Elegant Investment Co. is bullish on solar stocks as China's government takes action to promote increased use of alternative fuels and energy sources while moving to reduce the country's pollution. On the other hand, the investment firm is less bullish in its outlook for homebuilders, saying property curbs will continue to weigh on the sector. The firm manages $400 million.