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Why Inc. Stock Popped Today

By Steve Symington - Jul 9, 2015 at 1:42PM

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Sohu is up as investors regain confidence in government efforts to bolster China stock markets.

What's happening: Shares of ( SOHU 4.74% ) were up about 11% as of 1:45 p.m. Thursday on no news specific to the Chinese Internet company. Rather, the stock is climbing along with the broader China markets.

Why it's happening: After ending lower in eight of the last 10 trading sessions, the Shanghai Composite Index surged 5.8% for its biggest single-day gain in six years. And while the index is still up nearly 15% year to date, it has plunged a harrowing 28% over the past month alone. As a result, Chinese officials and brokerages have taken significant steps over the past week to slow the steep decline, including using China's central bank to provide capital intended for margin lending, allocating billions to buy Chinese stocks directly, and halting new share issuances. In addition, more than half of all stocks on the Shanghai and Shenzhen indexes have suspended trading.

As I suggested earlier this week, however, this all has little to do with Sohu's underlying business. So however great this rebound might feel after a difficult start to the week, I still think investors would be wise to keep a level head and focus instead on Sohu's efforts to create shareholder value over the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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