Tech on a Tear in China

Chinese stocks rallied for the fifth-straight day Wednesday, notching a new high just three weeks after last month's one-day plunge.

Investors were buying technology and mobile stocks after China Mobile (CHL Quote) released upbeat earnings. The Shanghai Composite rose 25 to 3057, underlining investors' bullish take on the region's prospects in the prosperous but volatile tech sector.

China Mobile said fourth-quarter earnings rose 23% from a year ago as it attracted more than 14 million users, mainly in rural areas of China. China Mobile also gained 6.3 million users in January, taking its subscriber rolls to 467.4 million users. Shares have risen 8% over five days.

Over the same span, China Unicom (CHU Quote) is up 10%, China Telecom (CHA Quote) has clawed back 6%, and China Netcom (CN Quote) has gained 4%.

Chip stocks have been strong, too. Taiwan Semiconductor (TSM Quote) rose on news that the Chinese government has granted the company permission to manufacture 0.18 micron wafers for the local market. United Microelectronics (UMC Quote) and Chartered Semiconductor (CHR Quote) rose as well.

Adrian Lin, who oversees $34 billion in Asia Pacific equity for Aberdeen Asset Management in Singapore, says valuations still have some way to go.

"Over the past 10 years, the region has become increasingly more adept at creating intellectual property," he says. "It's not like the late 90s, where irrespective of the quality of companies there was a strong surge in tech shares. Valuations now are at much more sensible levels."