NEW YORK, NY--(Marketwire - Nov 19, 2012) - Chinese stocks slumped last week after China announced the appointment of new government leaders. Bloomberg's Shanghai Composite Index (SHCOMP) fell to a seven-week low. "The composition of the top leaders indicates a go-slow approach to reforms of the financial markets and the economy and not in an aggressive way as expected by the market," said Dai Ming, a Hengsheng Hongding Asset Management Co. fund manager. The Paragon Report examines investing opportunities in Chinese Internet stocks and provides equity research on Baidu.com, Inc. (NASDAQ: BIDU) and Qihoo 360 Technology Co. Ltd. (NYSE: QIHU).
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China's soft economy, which is set to grow at the slowest pace in over a decade, has caused a slowdown in China's advertising market. Major Chinese companies such as Baidu, Renren, and Tencent have recently warned of slowing advertising revenue growth in the fourth quarter.
"The absence of the Olympic Games event and decelerating economic growth in China may slow revenue growth rates for the online-advertising industry as a whole, including our own online-advertising business," Tencent said.
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Baidu currently accounts for 78.6 percent of the search engine market in China, followed by Google and their 15.4 percent market share. Qihoo 360 Technology entered the market on August 16, and has recently launched a version of their So.com search engine for mobile devices according to Beijing Business Today. Baidu has recently forecasted revenues in the fourth quarter to range from 6.16 billion yuan ($987 million) to 6.35 billion yuan, its slowest quarterly sales growth since 2009.
"We view the guidance as reflection of a more challenging macro environment and weaker advertiser sentiment," Barclays Plc analyst, Alicia Yap, wrote in a recent report. "The launch of Qihoo's search service might also have a slight impact."
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