Chinese stocks can't go up forever, right? Sooner or later, the nation's red-hot stocks will bump against a ceiling, realize what they've done, and correct accordingly, right?
Did the streak come to an end last week? Not even close. Check out the two largest percentage gains on the New York Stock Exchange over the past trading week.
Last Week's Gain
Qiao Xing Mobile
If China Digital TV rings a bell, it's because China's leading provider of conditional access systems in the digital television market went public at $16 a pop two weeks ago. It seemed as if the first wave of aftermarket investors were going to get stung when the IPO opened at $35 before closing at $28. Five trading days later, the shares have raced all the way up to $49.13.
If Qiao Xing sounds familiar, it's because the stock appeared in my second installment two weeks ago, when the stock lit up the market with a 34% weekly gain.
And don't go thinking that the VIP party was only going on at the Big Board. The biggest Nasdaq mover was Hong Kong's City Telecom
Sure, China's scorching solar energy stocks took another hit when LDK Solar
However, I would argue that U.S. traders are still not overly smitten with Chinese equities. All one has to do is take a look at the list of closed-end funds that specialize in overseas equities. There are several funds that buy only Chinese stocks. They are all trading at a discount to their net asset value.
It's not as if the two funds are slackers, either. Greater China has more than doubled over the past year. Morgan Stanley's fund -- which snaps up A-shares listed on the Shanghai and Shenzhen exchanges -- is actually sporting a 231% gain over the past year.
In short, there's a sobering reality to the frothy hype. You can still get your buck's worth of Chinese stocks for $0.80 through these funds. That's not typically the sign of a top. Too many investors fear that a fall is coming. That pessimism is baked in. So excuse me if I suggest that accusations of overdone optimism are ringing hollow.
You'll find more than a few market-thumping Chinese stocks recommended in the Global Gains newsletter. Other Fool growth-stock newsletter services, like Motley Fool Hidden Gems, Rule Breakers, and Stock Advisor, have several picks that are based out of China.
Corrections will come. We had a sharp one in China this past winter. The step back then was only practice for the several steps forward that have been taken since.
Fly through related Foolishness:
Longtime Fool contributor Rick Munarriz speaks two languages fluently, neither of them Mandarin. He does not own shares in any company mentioned in this story, though he maintains a healthy overseas exposure with international stock funds. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
More from The Motley Fool
What's Juno Therapeutics Worth to Celgene?
Celgene may be considering a multibillion-dollar bid to acquire Juno.
PTC Inc. (PTC) Q1 2018 Earnings Conference Call Transcript
PTC earnings call for the period ending December 31, 2017.
Why Ascena Retail Group Inc. Stock Plunged 62% in 2017
The parent company of maurices just finished a tough year. Here's what investors need to know.