Why Bet Against China?

After saddling up the list of Wall Street's biggest percentage losers two weeks ago, Chinese stocks got back on the horse last week.

I have spent the past few weeks chronicling how Chinese companies keep dominating the weekly lists of the market's biggest winners on the different stateside exchanges. It's a phenomenon that has now gone on for five of thepastsixweeks.

Let's go over some of the biggest gainers over the past five trading days.

Last Week's Gain

AsiaInfo (Nasdaq: ASIA  )

31%

China Direct (AMEX: CDS  )

29%

China Yuchai (NYSE: CYD  )

27%

E-House (NYSE: EJ  )

24%

There isn't a common theme among the speedsters. AsiaInfo is an IT provider in a country that is quickly ramping up its corporate technology infrastructure. China Direct is a Florida-based company that specializes in consulting within China. Singapore's China Yuchai makes diesel engines in China, while E-House is a leading provider of real estate agency services -- both were singled out as Wednesday's biggest stock stars.

There were fundamental drivers in some of these cases. China Direct upped its guidance on Monday. It is now looking to generate revenue of $175 million this year, well ahead of its most recent forecast calling for $150 million on the top line. China Yuchai appointed a new CFO. AsiaInfo posted healthy third-quarter results, fueled by strength in its software products. Just today it signed a fresh contract with China Mobile (NYSE: CHL  ) subsidiaries.

Naturally, some investors will get skittish after enjoying huge gains coming out of China. No one wants to appear greedy. It's easy to follow Warren Buffett's lead, cashing out as he did when he recently locked in heady gains in PetroChina.

The bullish side of that argument is that abandoning China now, so early in its growth cycle, devalues the market potential within the world's largest country. It also doesn't hurt that the dollar is unlikely to strengthen against the yuan anytime soon. So buying into a hotter overseas market like China is a way to buy into faster-growing companies with a little foreign exchange kick if the dollar continues to fall in value.

But there were also plenty of other international winners this past week. Russia's Mechel OAO (NYSE: MTL  ) climbed 22% higher, while Mumbai's Videsh Sanchar Nigam (NYSE: VSL  ) rose by a sharp 28%. In the end, investors shouldn't stick to just one market. Whether it's an emphasis on China or the United States, there's a whole world of opportunities out there.

Fly overseas with this Foolishness:


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Related Tickers

12/31/1969 7:00 PM
ASIA.DL $0.00 Down +0.00 +0.00%
AsiaInfo-Linkage,… CAPS Rating: **
CHL $61.94 Up +0.20 +0.32%
China Mobile CAPS Rating: ****
CYD $20.65 Up +0.05 +0.24%
China Yuchai Inter… CAPS Rating: **
EJ $11.06 Down -0.42 -3.66%
E-House (China) Ho… CAPS Rating: *
MTL $1.73 Down -0.03 -1.70%
Mechel OAO (ADR) CAPS Rating: ***

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