Chinese Sina Corp, owner of Weibo, the Chinese twitter, was a great pick for me some time back going from $105 to $129 in a little over a month. Well since then it fell out of favor along with a lot of other Chinese stocks (and a fair number of American internet stocks as well), losing 35% of their value in six months. Well it jumped big yesterday after "a senior government official encouraged agencies to use microblogs for information disclosure." From the BusinessWeek article:
“The Chinese government acknowledging Weibo’s positive impact mitigates concern on Weibo’s regulatory risk.” C. Ming Zhao, an analyst with Susquehanna Financial Group in Boston, wrote in a research note today. “Street attention will be shifted toward commercialization of Weibo.”
At the same time you have GOOG reporting great results and some sighs of relief as resolution to the euro debt crisis is a light at the end of the tunnel. Perhaps we have begun a rally to end the year and perhaps risk tolerance has increased again.
Compared to prior levels, SINA seems cheap here, and I think it will take time for investors to digest this latest news about the government's stance toward microblogs.
I think it's kind of a no-brainer it gets back to $109, though I could see it reclaim $130 with enough time. As we all know, China represents the largest internet market in the world - and Western companies like Facebook and Twitter are not going to be their bailywick, both because of the consumers' innate nationalistic tendencies and more prominently because of the government's strong need for censorship.
For more reading, check out this Forbes article suggesting Weibo is beating RenRen in social networking growth.