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NetEase, Shanda Play Games, Make Money

Technology companies and the Chinese equity market have outperformed their benchmarks, highlighting "buy"-recommended Chinese tech stocks.

NetEase.com (NTES - Get Report) is the Yahoo-Google-Match.com-Nintendo-MySpace-Facebook-TheStreet.com of the world's most populous nation.

Shares of the 10-year-old company, China's second-biggest online games provider, have risen 19% in the past three months and 32% over a year, benefiting from an array of Web and wireless services to a growing community of users. Its offerings include online games, search capabilities, blogging, messaging, dating services, news and virtually every other imaginable form of information.

Shanda Interactive (SNDA) has focused on the areas it dominates: games and entertainment.

Shanda's online offerings should appeal to a wide audience, as it provides literature in addition to multi-player games. In addition, it has created an e-commerce service platform that provides electronic billing and payment capabilities, marketing services, a distribution network and customer relationship management tools.

Shanda rose to as much as $39.48 in early trading, only 61 cents from its all-time high. NetEase traded as high as $26.35, 81 cents below its record high.

China passed the U.S. last year as the world's largest Internet market. There are more than 250 million Web users, and the country might have 406 million users by 2010, according to Credit Suisse. Growth is spurring Chinese online gaming company Changyou.com to launch an initial public offering this week, as the number of users has doubled to more than 800,000 in less than two years. More than five of its Chinese rivals have conducted IPOs in the U.S. in the past five years.

Chinese stocks have outpaced those in the U.S. this year, with the Shanghai index up 13% this month and 30% this year, trailing only Peru among global indexes.

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