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.
