The Chinese wireless space caught fire again Tuesday. Shanda set off the latest sectorwide rally by revealing it had taken a big stake in Sina ( SINA - Get Report). Sina indicated it isn't interested in a merger, adopting a so-called poison pill aimed at diluting the holdings of any potential acquirer. Still, shares in both companies rallied sharply, and peers NetEase ( NTES - Get Report) and Sohu ( SOHU - Get Report) jumped as well. Shanghai-based Shanda lit the flame late Friday with a disclosure that it and controlling shareholder Skyline Media had taken a 19.5% stake in crosstown rival Sina. The company said it made the purchases in the open market. "For this and other reasons," Sina said Tuesday, its board adopted a shareholder rights plan. Companies offering wireless services in China, from messaging to games, surged onto the investing radar screen last year. U.S. tech fans raced to place their bets on which companies might succeed in serving a huge and fast-growing consumer market. Shanda, an online gaming company, and Sina, which provides services to users of wireless phones, have seen their shares whipped about during that time. Shares in Shanda -- which have zoomed from $10.58 to as high as $45.40 over the past year -- have benefited from investors' continuing fascination with the online gaming business. Meanwhile, the mobile services field has been hit with increasing uncertainty and competition, in the wake of last year's crackdowns on racy content. Those developments have hit Sohu and Sina especially hard. For its part, Sohu said Tuesday it bought back 885,000 shares last week at an average price of $15.66 a share, meaning it has now bought back 6% of its stock over 10 months. "We believe the buy-back is an attractive investment for the company and sends a positive message to our shareholders," said CEO Charles Zhang.
On Tuesday, Sina rose $2.19 to $27.79, Shanda added 85 cents to $30.86, NetEase added 78 cents to $40.85 and Sohu added 84 cents to $17.30.