As investors have sold off foreign stocks during the last six weeks, stocks of China-based companies have remained the most resilient.
Indeed, the Dow Jones CBN China 600 Index boasts a nearly 30% increase for 2006, making it the year’s best-performer of any global stock index. And investors in Chinese Internet stocks that are traded on the Nasdaq have done even better.
If history is any guide, shares of small, fast-growing companies could be in for a rough ride when the surging Chinese economy hits an inevitable speed bump. When it does, analysts and investors say, expensive Internet stocks will get rattled first, a kind of replay of the way the U.S.-based dot-bombs ushered in America’s great tech bust of 2001-2003.[Full Text]