3 China Stocks Bucking the Bearish Bias

58.com Inc (ADR) (NYSE:WUBA), Youku Tudou Inc (ADR) (NYSE:YOKU), and China Mobile Ltd. (ADR) (NYSE:CHL) are trading higher today, despite a sell-off in mainland markets

by Karee Venema

Published on Aug 21, 2015 at 11:10 AM
Updated on Jun 24, 2020 at 10:16 AM

Stocks in China landed with a thump today, following a disappointing reading on factory activity. While this volatile price action has typically had a ripple effect on U.S.-listed shares of mainland stocks in recent weeks, a handful of these equities are bucking the day's bearish bias. Included in the bunch are Internet issues 58.com Inc (ADR) (NYSE:WUBA) and Youku Tudou Inc (ADR) (NYSE:YOKU), as well as telecommunications concern China Mobile Ltd. (ADR) (NYSE:CHL).

WUBA is up 9.6% today to trade at $46.06, despite a price-target cut to $65 from $91 at Pacific Crest. Since topping out at an all-time high of $83.71 in late April, the stock has shed almost 45%. Against this backdrop, the equity's 14-day Relative Strength Index (RSI) closed yesterday at 15 -- solidly in oversold territory, which may explain today's surge.

Regardless, short-term speculators have rarely been as put-heavy toward 58.com Inc than they are now, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.25 -- in the 90th annual percentile. Even more telling is WUBA's front-month gamma-weighted SOIR of 2.83, which indicates near-the-money put open interest nearly triples call open interest among options expiring in the August series, which expires at tonight's close.

YOKU has popped 6.3% to linger near $16.83 -- paring its year-to-date deficit to 6%. More recently, the equity has surrendered almost half its value since hitting an annual high of $31.50 in early June. Similar to WUBA, the stock's 14-day Relative Strength Index (RSI) settled last night at 32 -- on the cusp of being oversold -- which may be why the equity is soaring today.

Sentiment is skewed toward the skeptical side, though. For starters, short interest jumped 13.2% in the last two reporting periods, and now accounts for more than 9% of the stock's available float. Meanwhile, more than half of analysts covering Youku Tudou Inc maintain a tepid "hold" recommendation.

CHL has tacked on 2.8% this morning to hover around $64.50, but appears to be running out of steam near its 200-day moving average. Longer term, the shares are up 9.6% year-to-date, and hit a nearly seven-year high of $75.52 in late April.

Optimism is high toward China Mobile Ltd., too. Each of the analysts covering the shares maintains a "strong buy" rating, while the average 12-month price target of $83.01 sits in territory not charted since May 2008. Elsewhere, just 0.1% of the stock's float is sold short, representing 2.8 times the average daily trading volume.

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