Bloomberg News

Energy Stocks in N.Y. Buck Hong Kong Plunge: China Overnight

December 12, 2011

Dec. 12 (Bloomberg) -- Chinese stocks traded in the U.S. rose Dec. 9 for the first day in four, paring losses for the week, as European efforts to stem the region’s debt crisis boosted energy and materials companies to a premium over Hong Kong shares.

The Bloomberg China-US 55 Index of the most-traded Chinese stocks gained 1.3 percent and finished the week down 1.1 percent. Yanzhou Coal Mining Co., China’s fourth-largest producer of the fuel, led gains for energy companies, adding 4 percent, and traded at the third-largest premium to the Asian shares among companies in the index. Cnooc Ltd., the nation’s largest offshore oil producer, gained 2.1 percent to $193.98.

European leaders expanded a bailout fund and agreed to a closer fiscal union to fight the crisis on Dec. 9. German Chancellor Angela Merkel said the deal puts Europe on the path toward a “lastingly stable euro.” U.S. stocks gained for a second week as consumer confidence exceeded estimates.

“Even though we didn’t get a bazooka-type resolution, they’re certainly moving forward and they’re building a framework for a resolution,” said Tim Hall, a managing director at Deltec Asset Management in New York. “It’s more bullish for commodities.”

The Hang Seng China Enterprises Index, which tracks Chinese companies listed in Hong Kong, fell the most in a month on Dec. 9, losing 3.2 percent. The Shanghai Composite Index of domestic shares reached the lowest level since March 2009 after dropping 0.6 percent.

Industrial Production

The stock measures fell as Chinese industrial output increased at the slowest pace in November since August 2009. Production rose 12.4 percent, trailing the median forecast of economists surveyed by Bloomberg. Inflation cooled for a fourth month as consumer prices rose 4.2 percent, lower than all 35 estimates compiled by Bloomberg.

Citigroup Inc. said a slowdown in China’s domestic consumption and overseas demand has been faster than expected this quarter. The brokerage cited feedback from retailers and manufacturers at a Hong Kong conference.

Chinese materials companies in the U.S. rose 2.9 percent, the best performance among nine industry groups. Three companies gained for every one that declined in the China-US index.

Investors may be turning to energy and material companies believing that they will benefit from increased demand as the global economy expands, said Richard Kang, chief investment officer at Emerging Global Advisors in New York. “If you are in the business of widget making, whether you are making cars or whatever, you need steel, you need copper and you need oil if you are going to ramp up.”

Cnooc, PetroChina

Yanzhou Coal led energy stocks higher, cutting its losses for the week to 2.3 percent. The American depositary receipts, which represent 10 ordinary shares, climbed to $23.05, while the Hong Kong shares declined to HK$17.58, the equivalent of $2.26.

Cnooc ADRs, which are worth 100 ordinary shares, rose 2.1 percent on Dec. 9 to $193.98 and gained for a second week. The Hong Kong shares slid to HK$14.78, or the equivalent of $1.90. One hundred Hong Kong shares cost about $3.98 less than the U.S. equivalent. PetroChina Co., the country’s second-largest oil refiner, rose 0.4 percent to $124.58, which is a 3 cent premium to the Hong Kong-traded shares.

Aluminum Corporation of China Ltd., the nation’s biggest aluminum-maker, rose 3.1 percent, the most among materials companies in the China-US index.

E-Commerce China Dangdang Inc. gave back part of Thursday’s 20 percent surge, falling 6.6 percent, the most among companies in the Bloomberg measure. China’s largest online bookseller’s plan to introduce an e-book platform will have a “minimal” effect on the company’s 2012 results, Adam Krejcik, an analyst at Roth Capital Partners, wrote in a Dec. 9 research note.

‘Proactive’ Fiscal Policy

Trina Solar Ltd., a Chinese solar panel maker, added the most in a week, rising 6.1 percent to $7.96. The company may benefit if China boosts stimulus spending after reports showed economic weakness, said Hari Chandra Polavarapu, an analyst at Auriga USA LLC in New York.

The IShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., increased 1.7 percent to $36.30. The Standard & Poor’s 500 Index jumped 1.7 percent in New York, advancing for a second week.

The Chinese yuan was little changed at 6.3647 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The yuan has advanced 3.8 percent this year, the best performance among Asia’s 10 most-traded currencies excluding the yen.

China will maintain a “prudent” monetary policy and a “proactive” fiscal policy next year, the official Xinhua news agency reported Dec. 9, citing a meeting of the Communist Party’s Politburo chaired by President Hu Jintao. China will “preset or fine tune policies in light of changes in economic development,” Xinhua reported.

--Editors: Richard Richtmyer, Lester Pimentel

To contact the reporters on this story: Zachary Tracer in New York at Ztracer1@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net;

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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