Red-Hot Chinese Stocks: SINA, SouFun, Youku Tudou

A number of Chinese stocks are on a tear, including SINA Corp (NASDAQ:SINA), SouFun Holdings Ltd (NYSE:SFUN), and Youku Tudou Inc (ADR) (NYSE:YOKU)

Jun 17, 2015 at 1:35 PM
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Stocks in Asia rallied big today, and this -- along with a buyout bid for Qihoo 360 Technology Co Ltd (NYSE:QIHU) -- is translating into gains for a number of China-based equities listed on U.S. indexes. Among the major movers are online media firm SINA Corp (NASDAQ:SINA), real estate portal SouFun Holdings Ltd (NYSE:SFUN), and Internet TV titan Youku Tudou Inc (ADR) (NYSE:YOKU).

  • SINA is up 4.7% at $60.55 after bouncing from its 10-day moving average, and earlier touched an annual high of $61.25. Traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ought to be pleased with the upward move, as they've bought to open more than three Sina Corp calls for every put during the past two weeks. The resultant call/put volume ratio of 3.42 outstrips three-quarters of comparable readings from the past year.

  • SFUN has tacked on 6.2% to wink at $9.49, bringing its year-to-date lead north of 28%. The shares have been ushered higher recently by their 10-week moving average, but could encounter resistance at the overhead $10 level. Option traders have been wagering on extended gains at a feverish pace of late, per SouFun Holdings Ltd's 10-day ISE/CBOE/PHLX call/put volume ratio of 40.65. Not only does this ratio indicate more than 40 calls have been bought to open for every put, but it also ranks in the bullishly skewed 90th percentile of its annual range.

  • YOKU has muscled 5.8% higher to flirt with $29.92, and has now advanced 68% in 2015. What's more, the shares are nearing their annual high of $31.50, touched on June 5. Nevertheless, skeptical traders have rarely been more active, based on Yukou Tudou Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.88, which outstrips 90% of comparable readings from the last year. Along similar lines, YOKU's Schaeffer's put/call open interest ratio (SOIR) of 1.72 rests a mere 4 percentage points from a 12-month put-skewed peak.

Interestingly, these gains are occurring amid a climate of extreme fear, according to a recent BofA-Merrill Lynch fund manager survey. Specifically, 70% of global investors believe China's equity market  is in a "bubble," and 50% foresee the nation's economy weakening. Risks to the market include stricter margin financing rules from the China Securities Regulatory Commission, and insider selling.


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