Look For Action in the Chinese Online Gaming Sector

• By the tickerspy.com Staff
• On 11:57 am EDT, Wednesday September 23, 2009

With games launching and an IPO scheduled for this week, investors should keep a close eye on the Chinese Online Gaming Index.

The Chinese online gaming sector has been in a somewhat volatile consolidation pattern since June, but recent news might help stocks find direction. Among the industry's most interesting stories is the spin-off of Shanda Interactive's (NASDAQ: SNDA - News) gaming segment. With the IPO scheduled for the end of this week, some analysts are still scratching their head over the decision to break from the division, which is responsible for 95% of Shanda's revenue. Roth Capital Partners analyst Adam Krejcik told Investors Business Daily that Shanda is "essentially spinning out what they do right now," which is online gaming.

Earlier this year Sohu.com (NASDAQ: SOHU - News) spun off its Changyou.com (NADAQ: CYOU) with great success. One of the year's first IPOs, Changyou.com has now more than doubled since its initial price of $16 a share. Whether Shanda's gaming division, which will be listed on the Nasdaq exchange under the ticker symbol "GAME", can mimic this performance is still to be determined. For now, investors appear bullish on the IPO, sending Shanda shares up by 4% in the last week.

As a whole, the Online Gaming Stocks Index is ahead by 3% today. It is currently outperforming the S&P 500 by more than 7% over the last month.

PerfectWorld (NASDAQ: PWRD - News) is the day's biggest winner, up by 7%. The company's newest title, ZhuXian 2, went into open beta testing on Monday.

Netease.com (NASDAQ: NTES - News) investors, and four-million Chinese gamers, are cheering the relaunch of the franchise in China. According to VentureBeat, the popular game went offline for longer than expected when government officials interfered with a "routine shift" to Netease from former operator The9 (NASDAQ: NCTY - News).

The above are all up by more than 10% in the last five sessions, as is Taiwanese competitor GigaMedia (NADAQ: GIGM). Webzen (NADAQ: WZEN) has added 5% for the period, and Giant Interactive (NYSE: GA - News) is a laggard, down -1.3%.

As of this writing, the Chinese Online Gaming Index is one of the top-50 performing tickerspy Indexes over the last month, up by 11%.

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