Two Chinese tech stocks SouFun Holdings Ltd. (NYSE: SFUN) and Qihoo 360 Technology (NYSE: QIHU) ranked No. 2 and No. 4 respectively of the top 10 best-performing tech stocks by total return in the US stock market in 2013, according to this Forbes post published on December 23th (The writer doesn’t believe there will be any changes in the ranking by the New Year’s Day).
SouFun stock is up 218% as of Dec. 20th and Qihoo’s up 165%. SouFun is one of the largest online real estate information and service providers in China. Qihoo is a rising star in China Internet market that became a threat to Baidu’s search dominance and started monetizing its own search service from early 2013. It’s clear to see where investors’ confidence is in. It also has something to do with the general performance of the US stock market in the second half of this year.
Thanks to issues like VIE, fraud and accounting scandal, Chinese stocks in general were not well received in the US stock market in a couple of years before 2013. In 2012, only two Chinese tech companies, VIPshop (NYSE: VIPS), an online discount retailer for brands, and YY Inc. (NASDAQ: YY), an online video/voice communication service provider, launched IPOs in the U.S.. The YY founder said he felt so nervous when his team decided to tell investors that the company would go public at a low price.
Both YY and VIPshop performed very well in this year too. Yes, it has something to do with the comparatively low IPO prices, but both the companies reported encouraging financials during the year.
Although the stock price of Baidu reached a new low when Qihoo just began search monetization, it began rising in July and made an all-time high this month.
Eight China concept stocks launched IPOs in 2013. Online retailer LightInTheBox (NYSE:LITB) was the first that went public in June. Five IPOs happened in the period of Oct. to Dec..
58.com (NYSE: WUBA) which went public on Oct.31st is often referred to as the China’s Craigslist although its business model is quite different. Qunar (NASDAQ: QUNR) debut one day later than 58.com.
Online lottery retailer 500.com (NYSE: WBAI) and mobile service provider Sungy Mobile(NASDAQ: GOMO) debut on the same day, Nov. 22th. The latest one is auto portal Autohome (NYSE: ATHM) that was on Dec. 11th.
Not every Chinese stock is happy with 2013. As recently as in the past November, the stock price of NQ Mobile Inc. (NQ), the Chinese Internet security company who claims its major users are outside China, plunged immediately after a Muddy Waters Research report was released that calls it a “massive fraud”. (Update: NQ Mobile shares would surge on the second-last day of 2013 after Morgan Stanley disclosed a 5.2% stake in the company.)
Some Chinese VCs and industry people believe investors in the US market regained confidence in Chinese tech stocks. It is expected there will be a wave of IPOs by Chinese tech companies next year. Alibaba’s e-commerce business is the most anticipated. Other names include Baidu’s iQiyi, mobile browser and service provider UC Web and mobile gaming company Chukong. Sina Weibo, known as China’s Twitter, said earlier this year they were preparing for IPO, too.