(Adds analysts’ recommendations in seventh paragraph.)
Oct. 13 (Bloomberg) -- Sina Corp., the owner of the Twitter-like Weibo service in China, rose the most in three months after a senior government official encouraged agencies to use microblogs for information disclosure.
Sina jumped 18 percent, the most since June 21, to $92.88 at the close of trading in New York, the highest since Sept. 19.
Government agencies and officials should “actively” use microblogs to communicate with people, disclose official information, respond to “societal concerns” and improve the government’s work, the official Xinhua News Agency reported, citing a speech by Wang Chen, chief of the Information Office of China’s State Council, at a meeting in Beijing today.
“The Chinese government acknowledging Weibo’s positive impact mitigates concern on Weibo’s regulatory risk.” C. Ming Zhao, an analyst with Susquehanna Financial Group in Boston, wrote in a research note today. “Street attention will be shifted toward commercialization of Weibo.”
Weibo had more than 180 million users at the end of June. Wang’s remarks came after Beijing City’s Communist Party chief Liu Qi asked websites to strengthen management and eliminate the spread of fake and misleading information on microblogs following his visit to Sina on Aug. 22.
Sina has tumbled 35 percent from a record $142.83 reached April 20 amid a worldwide equities rout that erased about $6.8 trillion from share values since the end of July, and reports on accounting irregularities at some smaller U.S.-listed Chinese companies. The New York Stock Exchange Arca China Index has declined 15 percent since the end of July.
Roth Capital Partners analyst Adam Krejcik reiterated his “buy” recommendation on Sina’s shares today, with a 12-month price target of $110. A total 15 analysts rate the shares “buy,” 11 suggest holding the shares while two recommending selling, according to data compiled by Bloomberg.
Wang also said there are issues in the development of microblog services that need to be solved through better management, including situations which threaten the security of the Internet and public interest, according to the Xinhua report.
Sina, which also owns the third-most visited website in China, pledged to ensure that information it provides online is authentic in a Sept. 9 proposal.
--Editors: Marie-France Han, Richard Richtmyer
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