Will Inflation Hurt Chinese Internet Stocks?

On Wednesday, another report gave investors more reasons to worry about China.  A preliminary purchasing managers’ survey found that China’s factory output decreased in December.  Factories experienced a decrease in domestic new orders, while growth in new exports slowed.  “The growth momentum remains weak with additional downside risks from exports and the property market not yet fully filtering through,” said Qu Hongbin, chief China economist at HSBC.

Furthermore, inflation in China has recently decreased.  China’s inflation rate reached a 14-month low, as consumer prices increased 4.2 percent from last year.  Slowing inflation may also point to a harder-than-expected landing in China.  “Curbing inflation is a good thing, but the reason why inflation is slowing is because the global economy is slowing,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. “If you see that fact, you can’t be so optimistic.”

Chinese internet stocks have been some of the hardest hit stocks recently.  Here’s a look at the performance of some well-known names:

Youku.com Inc. (NYSE:YOKU): Youku.com Inc. is an Internet television company. The Company’s Internet television platform enables consumers to search, view and share video content quickly and easily across multiple devices in the People’s Republic of China.  Shares have fallen 13 percent in the past month, and are down 51 percent year-to-date. Get the most recent company news and stock data here >>

Baidu, Inc. (NASDAQ:BIDU): Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, pay for performance and news, MP3, and image searches.  Shares have decreased 18 percent in the past month, and are down 17% year-to-date. Get the most recent company news and stock data here >>

Renren Inc. (NYSE:RENN): Renren, Inc. operates an Internet website. The Company operates a real-time social networking website that offers users the ability to communicate, share information and user-generated content, play online games, listen to music, shop for deals, and use other services.  Shares have fallen more than 25 percent in the past month. Get the most recent company news and stock data here >>

Sohu.com Inc. (NASDAQ:SOHU): Sohu.com Inc. operates an Internet portal in China. The Company’s Web site consists of Chinese language Web navigational and search capabilities, Web-based communications services, and a platform for e-commerce services.  Shares are down 20 percent in a month, and have fallen almost 30 percent year-to-date. Get the most recent company news and stock data here >>

Perfect World Co., Ltd. (NASDAQ:PWRD): Perfect World Co Limited develops and operates online games. The Company primarily develops 3D gaming technologies.  Shares are down nearly 10 percent in the last month, and have plummeted 53 percent year-to-date. Get the most recent company news and stock data here >>

Giant Interactive Group, Inc. (NYSE:GA): Giant Interactive Group Inc. develops online games. The Company focuses on multiplayer online, or MMO, games that are played through networked game servers in which players are able to simultaneously connect and interact.  Shares are mostly flat for the last month, but have declined 43 percent year-to-date. Get the most recent company news and stock data here >>

E-Commerce China Dangdang Inc. (NYSE:DANG): Dangdang, Inc. is a business-to-consumer Internet retailer. The Company sells books and other media, beauty and personal care, home and lifestyle products.  Shares are down 20 percent in a month, and have plummeted 84 percent year-to-date. Get the most recent company news and stock data here >>

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