U.S. investors have lost a lot of money betting on the "China Miracle" since the market peaked in the fall of 2008.
But after more than five years of suffering disappointingly poor returns, the Chinese stock market just might be making a comeback.
Over the past three months, the iShares China Large Cap (FXI) — the major Chinese ETF that tracks an index of 25 Chinese large-cap stocks — has soared 15.53%. That makes the Chinese stock market the single-best-performing stock market over that time period among the 46 that I track at my firm, Global Guru Capital.
Dig a bit deeper, and you'll find that the Chinese technology sector — and within that, the Internet sector — has shown even more strength than the overall Chinese market.
That's why the renewed focus on Chinese Internet stocks — thanks to the upcoming listing of Chinese e-commerce giant Alibaba — could make Chinese Internet stocks one of the hottest sectors in the coming months.
Alibaba: The Biggest IPO in History?
If the investor relations firms are doing their jobs, you'll be hearing a lot more about Alibaba in the coming days. A hodgepodge of various online marketplaces for consumers and businesses, Alibaba is minting a fortune by charging fees to 8.5 million businesses advertising on its sites.
As with all things Chinese, the numbers associated with Alibaba are all about superlatives.
Alibaba is already the largest e-commerce company in the world in terms of value of merchandise sold. Alibaba's transaction volumes already surpass eBay Inc. and Amazon.com, combined. It boasts 279 million active buyers. That already trounces Amazon.com's global user base of 244 million.
Just yesterday, Alibaba's senior management hit the road, hat in hand, looking to raise $20-$24 billion for the company's upcoming initial public offering (IPO). That puts the Alibaba offering on track to become the biggest-ever IPO, topping the $22 billion raised by Agricultural Bank of China Ltd. in 2010.
To put those numbers in perspective, Twitter raised about $2 billion in 2013 and Facebook generated $16 billion in 2012.