Bloomberg News

Seaspan Jumps on Buyback as NY Index Slumps: China Overnight

December 13, 2011

Dec. 14 (Bloomberg) -- Chinese shares traded in New York dropped to a two-week low as the U.S. central bank didn’t announce further easing and Germany may reject expanding a bailout fund. Solar manufacturers led declines as polysilicon prices fell to the lowest in a decade.

The Bloomberg China-US 55 Index of the most-traded Chinese stocks extended this week’s slide, slumping 0.7 percent to 96.12, the lowest since Nov. 25. Suntech Power Holdings Co., the world’s biggest solar-panel maker, declined 9.4 percent. Seaspan Corp., which owns a fleet of container ships, surged after announcing a buyback.

Chinese stocks turned negative as the Federal Reserve didn’t launch new monetary easing measures and said the U.S. economy is “expanding moderately.” A report that German Chancellor Angela Merkel is rejecting an increase in the upper limit of funding for Europe’s bailout mechanism also weighed on shares. About three stocks dropped for each that gained.

“People are just buying and selling based on what one person in Europe says, instead of what the fundamentals of a company are indicating,” Jeff Papp, an analyst at Oberweis Asset Management Inc. in Lisle, Illinois, said by phone. “When you get uncertainty from things like the Europe situation, people would rather sell the things that have the most amount of volatility and uncertainty about them.”

Shanghai Stocks Dive

The Hang Seng China Enterprises Index, which tracks Chinese companies, dropped for a fourth day, sliding 1 percent. The Shanghai Composite Index of domestic shares fell 1.9 percent, remaining at March 2009 lows. The measures have plunged this year on mounting concern that Chinese monetary policy and Europe’s debt crisis are slowing growth in the world’s most populous nation.

Seaspan jumped 16 percent to $12.16 after announcing a tender offer to buy as many as 10 million shares for $15 each. The shares closed at $10.45 on Dec. 12 and have fallen 2.1 percent this year. Seaspan’s buyback “reflects our confidence in the company’s future prospects,” Chief Executive Officer Gerry Wang said in a statement.

Acquisition Plans

The Hong Kong-based company also said it plans to acquire Seaspan Management Services Ltd. for $54 million in stock, excluding potential balance sheet adjustments and future payments. Seaspan Management Services provides technical, administrative and strategic services to Seaspan.

The acquisition will help Seaspan cut its costs and remove conflicts of interests for officers with interests in both companies, said Natasha Boyden, an analyst at Cantor Fitzgerald in New York.

Suntech declined 9.4 percent, the biggest drop in the China-US index. Yingli Green Energy Holding Co. fell 8.3 percent and Trina Solar Ltd. slid 8.1 percent.

Prices for polysilicon, the main raw ingredient in most solar panels, fell 1.9 percent last week to $27.11 per kilogram, according to Bloomberg New Energy Finance, extending this year’s drop to 64 percent. Falling prices have compressed margins for many solar manufacturers and put U.S. companies including Solyndra LLC. into bankruptcy.

The Fed said economic conditions will likely warrant “exceptionally low” interest rates through at least mid-2013. It once again said “strains in global financial markets continue to pose significant downside risks to the economic outlook.”

U.S. stocks turned negative after the Fed’s statement. The Standard & Poor’s 500 Index fell 0.9 percent.

Sina, Baidu

Baidu Inc., the search-engine owner, dropped 4.3 percent to the lowest in two weeks after Credit Suisse cut earnings estimates for the shares, citing lower prices for advertising. Analysts including Wallace Cheung lowered their target price to $130 from $135.60 and maintained a “neutral” rating, according to a Dec. 13 research note.

Sina Corp., the owner of China’s Twitter-like Weibo service, extended the 5.5 percent drop it posted on Dec. 12, slumping 2.4 percent.

The IShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., lost 0.6 percent to $34.74.

China’s stocks will have a “huge year” in 2012 after sliding the past two years as the central bank loosens monetary policy, Aaron Boesky, chief executive officer of Marco Polo Pure Asset Management in Hong Kong, said in an interview on Bloomberg Television.

“We expect a dovish monetary policy next year combined with a new administration, it should be a big sea change,” Boesky, who also invests in yuan-denominated stocks, said. “Next year should be a huge year for the Shanghai stock market.”

Brazil’s Bovespa Index added 0.3 percent, the Micex recovered 2.1 percent from a two-month low in Russia, and India’s BSE Sensitive Index gained 0.8 percent. The Shanghai benchmark is trading at 10.7 times next year’s estimated earnings, above the 10.1 level for Brazilian shares. Russian equities are valued at 4.7 times 2012 earnings and Indian shares trade at 13.8 times projected profits.

The Chinese yuan fell 0.1 percent to 6.3652 per dollar in Shanghai, according to the China Foreign Exchange Trade System.

--Editors: Marie-France Han, Glenn J. Kalinoski

To contact the reporter on this story: Zachary Tracer in New York at +1.ztracer1@bloomberg.net.

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


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