The E-mini S&P 500 is in the sell zone on the weekly chart. Traders can expect a pullback over t...
Following China's Twitter
10/21/2010 12:30 pm EST
Nicholas Vardy, editor of Global Stock Investor and Global Bull Market Alert, says emerging market stocks will surge in the fourth quarter, and he likes a Chinese clone of Twitter.
Although I continue to believe that global markets are due for a pullback, the reasons to be bullish about global stocks between now and year-end are growing.
First, developing countries are revising projected economic growth rates across the board, with Singapore expected to clock an almost 15% growth rate for 2010.
Second, after being locked in a trading range for much of the year, many markets have broken out to the up side.Third, [the fourth quarter] tends to be the strongest quarter for global stocks.
Finally, the announcement by the US Federal Reserve that it is willing to inject yet even more liquidity into the global financial system only adds fuel to the fire.
The bottom line? A wall of liquidity is driving up emerging-market stocks all the way across the board.
[Recently,] investors pumped the most cash into emerging-market equities since late 2007, with inflows of more than $6 billion in the week ended October 6th. Investors took out $3.2 billion from US stock funds during the same week.
Sina (Nasdaq: SINA) [is] a leading Chinese online media services provider. Until relatively recently, Sina's services were similar to other portals in China. But its Sina Weibo, a new Twitter-like micro-blogging service, has caught users' (and investors') attention. Here's why...
First, unlike Twitter, Sina Weibo is in Chinese, giving it a big edge with local users. It also allows users to attach pictures, video, and audio to their postings--something you can't do easily with Twitter.
Second, Sina plays nice with the Chinese government's restrictions on content. Sina is one of the few micro-blogging services still around in China after the government banned Twitter and other competitors for refusing to monitor their content.
Finally, micro-blogging probably has bigger potential in China than anywhere else in the world. Why? Although like Twitter, Sina Weibo imposes a 140-character limit on messages, 140 Chinese characters convey much more information than 140 characters in English or Spanish.
Some investors dismiss Sina as an also-ran compared with China's current “perfect stock,” Internet portal Baidu (Nasdaq: BIDU). They're wrong for several reasons.
Although Baidu generates the most traffic, Sina is the default setting on more Chinese computers than any other portal, Baidu included.
And after its run-up over the past 18 months, Baidu is trading at a stratospheric 103x [trailing-12-month] earnings. That compares with Sina's single-digit P/E of 7.4x. And Sina actually has outperformed Baidu over the last three months. No wonder Credit Agricole Securities recently reiterated a Buy rating on Sina and raised its price target on the micro-blogging service from $51 to $63. That's about 21% up side from its current price [of below $52].
So, buy Sina at market and place your stop at $42.50.
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