SouFun Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese real-estate marketing specialist SouFun (NYS: SFUN) entered a seller's market today, falling as much as 14.4% on heavy trading before bouncing back about halfway.

So what: China's statistics bureau just reported home sales data, showing that real estate prices in major cities like Beijing and Shanghai are starting to cool off. The news also sunk rival Sohu.com (NAS: SOHU) by about 6% and erased early gains for China Real Estate Information (NAS: CRIC) , which reported a stellar quarter last night.

Now what: It's a direct result of government-imposed restrictions on new home sales but hurts listing experts like SouFun nonetheless. Today's pain could protect tomorrow's gains if those new restrictions do their job. A real estate bubble has been blowing in China, much like the one that popped in America three years ago, and I shouldn't have to remind you of the shockwaves that event created.

Interested in more info on SouFun? Add it to your watchlist.

At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Sohu.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.