The Fierce Battle for Chinese Internet Supremacy

• By the tickerspy.com Staff
• On 12:54 pm EDT, Thursday October 29, 2009

China's massive Internet market has a number of companies battling for their share of various segments.

Earlier this week, Reuters highlighted what they called "a rare stumble" for China's top search engine Baidu.com (NASDAQ: BIDU - News). The company's potential err in judgment regarding the switch to a new ad system could cost it revenues and, more importantly, customers in the near future as Google (NASDAQ: GOOG - News) and other competitors attempt to pick up those put off by the change.

Meanwhile, search engines aren't the only companies battling for their share of the world's largest Internet market. The stakes are even higher for components of the Chinese Online Gaming Stocks Index, where the Chinese market was worth nearly $1 billion in Q2 - almost four-times that of the search engines, according to Reuters.

Earlier this week, lowered guidance from Sohu.com (NASDAQ: SOHU - News) gaming spinoff Changyou.com (NASDAQ: CYOU - News) weighed on the sector, where eight of nine U.S.-listed players are negative in the last five sessions.

Netease.com (NASDAQ: NTES - News), the sector's largest component at $4.6 billion, climbed out of the red for the last week during today's session. Meanwhile, Perfect World (NASDAQ: PWRD - News) and the segment's smallest component Webzen (NASDAQ: WZEN - News) are down by less than -1% for the period.

Shanda Interactive Entertainment (NASDAQ: SNDA - News) and Shanda Games (NASDAQ: GAME - News) are both up by more than 10% in today's session. Shanda Interactive, which spun off its gaming division in September, was the beneficiary of a recent court ruling after a smaller company accused it of abusing its dominant position in the online literature market, according to the Financial Times.

Investors should be wary of developments related to China's ban of foreign investment in the gaming sector, and keep a close eye on trends in the Chinese Online Gaming Stocks Index.

As of this writing the Index is one of the 25 worst-performing tickerspy Indexes over the last month, down by -10.5%.

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