After months of a deep freeze, Chinese small cap stocks are showing signs of major life. These plays have surged dramatically today, with many gains topping 10%.
Renren Inc(NYSE:RENN) $3.17, +0.38 (13.62%), E Commerce China Dangdang Inc (ADR) (NYSE:DANG) $4.17, +0.30 (7.75%), China New Borun Corp (NYSE:BORN) $1.50, +0.19 (14.50%).
Chinese small caps have been hated for years at this point. This is due to the constant stream of fraudulent companies being discovered in China. Investors do not truly know if the Chinese company they are looking at has revenues and earnings as stated, or if it is all made up.
With the market trading at all time highs, that seems to be a thought fading from view. Reality has little meaning when investors are running after yield and momentum. Now the search is on for anything that could advance and is still near lows. For the Chinese stocks, multi year lows. Spec money is chasing anything that has a pulse and these are no different.