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 (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.

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