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) - Get Report

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) - Get Report

is up 10%,

China Telecom

(CHA) - Get Report

has clawed back 6%, and

China Netcom

(CN) - Get Report

has gained 4%.

Chip stocks have been strong, too.

Taiwan Semiconductor

(TSM) - Get Report

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) - Get Report

and

Chartered Semiconductor

( CHR) 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."

But the gains don't come without risk. Just weeks ago, technology companies in Asia were some of the hardest hit when the Shanghai Composite Index nosedived 9% in a day.

"This business is just about soaring," says Jason Gao, a prominent Shanghai entrepreneur and one of the founders and early-stage investors in

Baidu.com

(BIDU) - Get Report

. "The nature of the opportunity and this kind of volatility is all part of the Asian experience, and ultimately the China experience."

Last year the technology sector attracted the most venture capital in China, netting $920.7 million for 131 tech companies. That's nearly half 2006's $1.89 billion of venture capital investment in the country, according to a research report issued by AltAssets. Some believe technology and wireless industries will see a surge in earnings during the 2008 Olympic Games in China's capital.

"The timing is crucial for early-stage 3G companies now because the Chinese government has decided to make this a priority in 10 major cities for the World Olympic Games in Beijing in 2008," says Gao, referring to the third-generation wireless technology that enables high-speed Internet and other services.

Shim Jae-Youb, a buy-side analyst for Meritz Securities in Seoul, is unconcerned about fears of the overheating in Asian economies. He says that his outlook is "much more positive than for the U.S."

He cites long-term strength regionally in financials, chemicals and shipping, despite widespread concern in the region only weeks ago for these three sectors.

"Taiwan has taken several years to come along but has now carved out a strong niche in manufacturing," adds value investor Lin of Aberdeen Asset Management. "We don't look at short term cycles. The key is to remain invested in these companies over the long term."

At the time of publication, Daniel M. Harrison had no positions in stocks mentioned.

Harrison is a business journalist specialising in European and emerging markets, in particular Asia. He has an MBA from BI, Norway and a blog at

www.theglobalperspective.biz

. He lives in New York.