Bears Are Clearing Out of China

Chinese Internet companies aren't racing back into fashion, but naysayers are starting to clear out of the world's most populous nation.

The market exchanges are out with their latest tallies on short sales, and the number of bearish wagers as of mid-April have been falling sharply for many of the country's bellwethers.

There were just 2.2 million shares of Dangdang (NYSE: DANG  ) sold short. That's a 52-week low for the Chinese e-tailer, and well below the 9.6 million shares that were sold short in May of last year. SINA (NASDAQ: SINA  ) also clocked in with a new low. There were just 1.8 million shares in bearish wagers against the online portal behind the Twitter-like SINA Weibo platform. There were 9 million shares sold short 10 months ago. Renren (NYSE: RENN  ) came in at 3.8 million shares sold short, near its low of 3.1 million just two weeks earlier. There were 24.9 million shares of Renren borrowed by skeptics of the leading social networking website operator in May of last year.

The exodus isn't universal. Youku Tudou (NYSE: YOKU  )  had 11.2 million shorted shares as of mid-April. The leading video streaming website hasn't had this many naysayers since late last year.

Then there's Baidu (NASDAQ: BIDU  ) . China's largest online search engine had a recent record 12.8 million shares sold short at the end of March. That number dipped to 12 million on April 15, but it's naturally too early to claim that the bears are moving on at Baidu.

However, the general direction or market sentiment is shifting away from shorting Chinese equities. It's a smart move. Yes, China's economy is having its growth hiccups, but these companies for the most part are growing a lot faster than their stateside counterparts.

Outside of SINA, these companies are expected to grow their revenue by at least 28% this year. SINA's 14% projected top-line spurt isn't exactly shabby, either.

The companies aren't perfect. Dangdang, Renren, and Youku Tudou are all presently losing money. Baidu fell short on the bottom line in its latest quarter. However, these are all companies that are clearly growing in popularity judging by the healthy double-digit revenue growth.

You're doing the right thing, bears. You don't want to get in China's way when it does bounce back.

Betting on China
There's plenty of growth still to be had if you buy the right Chinese growth stocks.

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