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Chinese Internet Stocks Getting Crushed

Stock-Markets / China Stocks Jun 08, 2011 - 01:40 PM GMT

By: Trader_Mark

Stock-Markets

It looks in retrospect that RenRen (RENN) was the top of the "chinese internet/ social media" bubble, at least this time around. [May 2, 2011: RenRen IPO Appetite Seen as Huge, but Red Flags Abound] [Apr 19, 2011: RenRen Set to IPO May 4th] That broken IPO has been a disaster, as we warned. (IPO Priced at $14, first day mark at $24!) At this pace it may actually go low enough where I'd be interested!


With lots of scandals - frauds (purported or real) in Chinese stocks of late the discount on any Chinese stock has grown. But today is an especially frightful day as in a relatively quiet day in markets, the Chinese stocks - many IPOs of the past 6-7 months - are being taken to the cleaners.

RENN - 13%
YOKU -10%
SINA -9%
QIHU -8.5%
HMIN -8% (not an internet stock)

amongst others...

I mentioned about 2 months ago I was no longer backing Sina (SINA) at that valuation and price, after banging the drum in late 2010. It also may soon be approaching a level that makes it interesting once more. But obviously on a technical level it is broken badly.

Much like the silver trade - once the momo lemmings leave a trade, you just have to get out of dodge! When a sub sector is in a fervor there is no valuation people will pay. But when the momentum reverses, old school metrics sort of matter again.

No positions

By Trader Mark

http://www.fundmymutualfund.com

Mark is a self taught private investor who operates the website Fund My Mutual Fund (http://www.fundmymutualfund.com); a daily mix of market, economic, and stock specific commentary.

See our story as told in Barron's Magazine [A New Kind of Fund Manager] (July 28, 2008)

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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