SINA 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 SINA (NAS: SINA) fell more than 11% in early trading on fears that Chinese regulators would either limit or eliminate the corporate structure that allowed the company to offer shares on the Nasdaq. Sohu.com (NAS: SOHU) , NetEase (NAS: NTES) , and Baidu (NAS: BIDU) also fell.
So what: We've seen this before. Not even a week ago, the same concerns over so-called Variable Interest Entities (VIE) sent the stock lower by 13%. VIE companies circumvent the rules against selling stock to foreign investors by replacing a common equity structure with a series of contractual agreements that resemble the rights assigned to common shares.
Now what: There's really no telling what regulators will do, but a wholesale crackdown seems unlikely. The U.S. is figuring out how to deal with structural economic concerns just as China is rising, thanks mostly to the same Internet concerns now under the microscope. Limiting them now would be akin to pulling star players during the middle of a playoff game. Do you agree? Would you buy any of these Chinese issues at current levels? Please weigh in using the comments box below.
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At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.Motley Fool newsletter serviceshave recommended buying shares of SINA, Sohu.com, Baidu, and NetEase.com. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.