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Chinese Web stocks are surging back

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The MSCI China Internet index seems to have bottomed out and is now back up over 11% in the last few weeks. What does this tell us about allocation and risk? The fact is, the Chinese Web space is still on the speculative side, with all the good and bad that entails. On the positive side, obviously, this is a potentially huge market and has been growing at an extremely fast rate. But on the downside, there are traders out there worried that a bubble in valuations means that these companies' underlying businesses will never quite catch up to their aggressive stock prices. And with the recent dispute surrounding Alibaba ( ALBCF , quote ), the so-called "EBAY of Asia," still fresh on many minds, it is no wonder that some have been hesitant to get involved until accounting standards and governance clear up. Take a look at what the infighting has done to ALBCF: As a result, the China Internet index is still down 37% from its mid-April high. It looks like we rounded a near-term bottom on Monday, so risk may be back on the table. Time to take a fresh look at the big names like Baidu ( BIDU , quote ) and Shanda Interactive ( SNDA , quote ), not to mention more speculative plays like Renren ( RENN , quote ), which have been beaten up along with their more established counterparts.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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