Dec. 30 (Bloomberg) -- Chinese equities listed in New York rose for the first time in three days after U.S. housing and labor market data improved and on speculation China may cut banks’ reserve requirements in January to sustain growth.
The Bloomberg China-US 55 Index of most-traded Chinese shares in the U.S. gained 0.8 percent to 95.49 as trading closed in New York. Elong Inc., the nation’s second-biggest online travel company, jumped the most in a month after Mizuho Securities Asia Ltd. maintained a “buy” recommendation versus a “neutral” for its biggest rival. China Life Insurance Co. rose the most in a week after signing an asset management agreement with its unit.
Chinese policy makers may cut the amount of cash lenders must set aside as reserves after the New Year’s Day, according to a commentary in the official China Securities Journal yesterday. The reserve ratios were last cut by half a percentage point earlier this month. The U.S. index of pending home sales for November increased to the highest level since April 2010, and the four-week moving average for jobless claims, a less volatile measure than the weekly figures, dropped to the lowest since June 2008.
“It’s possible for the central bank to cut the reserve ratio by another 50 basis points before mid-January,” Ting Lu, a Hong Kong-based economist with Bank of America Corp., wrote in a report yesterday. Major growth indicators for December and the fourth quarter will confirm a “soft-landing” in the Chinese economy, he wrote.
Elong, whose biggest shareholder is U.S. online travel agency Expedia Inc., surged 7.4 percent to a three-week high of $14.50.
Elong’s e-coupon program, in which the company refunds part of its fees back to travellers, “has proved to be successful” since it started in 2009 and helped the company lead customer growth, Muzhi Li, an analyst at Mizuho wrote in a research note yesterday. Elong’s hotel bookings rose 42 percent in the third quarter compared with a 17 percent increase for its rival Ctrip.com International Ltd., the report said.
Li maintained a “buy” recommendation on Elong, with a 12- month price target of $23. He kept a “neutral” for Ctrip, which climbed 1.2 percent to $23.33 in New York.
China, the world’s second-largest economy, grew 9.1 percent in the third quarter from a year earlier, down from 9.5 percent in the second. Consumer prices rose 4.2 percent in November from a year ago, the slowest pace in 14 months.
Growth may slow to 8.7 percent in the fourth quarter and inflation rate may remain at 4.2 percent, Lu at Bank of America predicted.
Business activity in the U.S. expanded more than forecast yesterday. The Institute for Supply Management-Chicago Inc. said its business barometer decreased to 62.5 this month from 62.6 in November. Economists forecast the gauge would fall to 61, according to the median of 49 estimates in a Bloomberg survey.
China Life, the listed unit of the country’s biggest life insurer, added 1.3 percent, the biggest daily gain since Dec. 20, to $36.86. The company signed an agreement with its asset management unit to help invest up to 300 million yuan ($47.5 million) of its funds in 2012 and about the same amount for each of the following two years, it said in a regulatory filing yesterday.
The transaction will “help realize the effective allocation and utilization of current resources, thereby raising the profitability of the company and its subsidiaries,” according to China Life’s statement.
Huaneng Power International Inc. gained 1.6 percent, the most in a week, to $21.11 in New York trading. The company said Dec. 27 China Huaneng Group, which holds about 52 percent of the unit’s shares, will continue to increase its stake by as much as 2 percent in a year, starting Dec. 31, after increasing its holdings by 2 percent in the past year.
The Shanghai Composite Index rose for a second day, rebounding 0.2 percent to 2,173.56 after reaching the lowest level since March 2009 on Dec. 27. The Standard & Poor’s 500 Index added 1.1 percent, restoring a gain for 2011, to 1,263.02.
The Shanghai benchmark is trading at an estimated price- earnings ratio of 10.5 times. That compares with 13.6 for Indian stocks, 10 for Brazilian shares and 4.9 for Russian equities.
Yingli Green Energy Holding Co. advanced the most among solar shares in the Bloomberg gauge of U.S.-listed Chinese shares. Yingli leaped 4.9 percent to $3.84, the most since Dec. 20.
JA Solar Holdings Co., based in Shanghai, said it won a contract to supply Solarhybrid AG 19 megawatts of solar modules for the Allstedt I solar project on a former German military airfield in Halle. The company expects total shipments to Solarhybrid to reach 40 megawatts in 2011, according to a statement on Globe Newswire. The company advanced 3 percent to a week high of $1.36 in New York trading.
China said it will discourage foreign investment in polysilicon, the raw material used in solar panels, curbing supply in an industry struggling with overcapacity and falling prices.
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 0.9 percent to $34.85. The Chinese yuan was little changed at 6.3192 per dollar, according to the China Foreign Exchange Trade System.
--Editors: Marie-France Han, David Papadopoulos
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