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Jan. 4 (Bloomberg) -- Chinese equities traded in the U.S. rose the most in a month, led by solar and oil companies involved in overseas acquisitions, as manufacturing increases from China to the U.S. suggested production will withstand Europe’s debt crisis.
The Bloomberg China-US 55 Index advanced 3.2 percent, the most since Nov. 30, to 98.92 as trading closed in New York. A 5.7 percent increase in PetroChina Co. created a 1 percent premium over its Hong Kong-traded shares, the most in two weeks. China Petroleum & Chemical Corp. jumped to an 11-month high after agreeing to buy a stake in Devon Energy Corp.’s exploratory oil projects in the U.S. Trina Solar Ltd. led gains among peers after LDK Solar Co. said it planned to buy Germany’s Sunways AG.
China’s purchasing managers’ index was 50.3 in December, from 49 in November, the government said Jan. 1. The reading exceeded all forecasts of 15 economists in a Bloomberg survey where the median estimate was 49.1. Manufacturing in the U.S. grew in December at the fastest pace in six months, and production also improved in nations from the U.K. to Australia.
“China’s PMI expansion is a big positive sign and provides investors with greater confidence that there will not be a hard landing in China,” said Kevin Pollack, a fund manager at Paragon Capital LP in New York. “While there still are significant downside risks given the euro zone crisis, any positive news can lead to a lift in the markets and very good news can lead to a significant lift in the markets.”
LDK, China’s second-largest solar-panel maker, intends to buy a 33 percent stake in Sunways, LDK said in a Jan. 3 statement. The Jiangxi, China-based company also offered to purchase the remaining stake of Sunways, which has a market value of 22 million euros ($28.7 million). The acquisition is expected to be completed in the first quarter of 2012, LDK said.
Other Chinese companies may be interested in buying European solar firms only if such transactions wouldn’t force them to assume more than 100 million euros of debt, according to Katharina Cholewa, an analyst at WestLB AG in London.
LDK climbed 4.5 percent to $4.38, the most in a week. Yingli Green Energy Holding Co. leaped 7.1 percent to a two-week high of $4.07. Trina, the fifth-largest solar-panel supplier, gained 7.3 percent to $7.17.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong surged 3 percent yesterday to 10,235.17. The Standard & Poor’s 500 Index rallied 1.5 percent to a two-month high of 1,277.06. The Shanghai Composite Index gained 1.2 percent on Dec. 30 to 2,199.42.
China’s stocks may provide positive returns in 2012 after a “volatile” first half of the year, Daiwa Capital Markets said in a research note yesterday. While China’s economic growth is likely to cool to the slowest pace in a decade, “the equity market risk/reward outlook is good,” analysts led by Mingchun Sun at Daiwa wrote.
The American depositary receipts of PetroChina., the nation’s largest oil producer, jumped 5.7 percent, the most since May, to $131.38. It agreed to buy a remaining 40 percent interest in the Mackay oil-sands project from Canada’s Athabasca Oil Sands Corp., the Calgary-based company said in a statement yesterday.
China Petroleum, the nation’s biggest oil refiner known as Sinopec, surged 6.2 percent to $111.59, the highest level since Feb. 8. The ADRs of its unit Sinopec Shanghai Petrochemical Co. advanced 6.1 percent to $35.10, the most in a month.
Sinopec’s unit will pay $900 million in cash and as much as $1.6 billion in Devon’s future drilling costs in exchange for a one-third stake in Devon’s oil projects covering 1.2 million acres in the U.S., including Ohio’s Utica Shale and petroleum deposits in Louisiana, Oklahoma, Michigan, Colorado and Wyoming, Devon said yesterday in a statement.
China, the world’s second-largest economy, expanded 9.1 percent in the third quarter from a year earlier, down from 9.5 percent growth in the second quarter. Consumer prices rose 4.2 percent in November from a year ago, the slowest pace in 14 months.
Chinese policy makers may let the three biggest state-owned refiners set oil product prices instead of the government, to improve the pricing mechanism, the 21st Century Business Herald reported Jan. 1, citing unidentified people involved in formulating a plan. The change may enable refiners to adjust more quickly to global prices of crude oil, the report said.
Health Care, Energy
Liu Yang, chairwoman of Atlantis Investment Management Ltd. in Hong Kong, said she favors telecom, health care, energy and resources stocks in 2012 in an interview with Bloomberg Television yesterday.
“China needs so many good things to support the well- being, to support urbanization,” she said. “Those are the things we must hold and we must invest with them to make the next gain.”
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rallied 3.2 percent to a three-week high of $35.98, after losing 19 percent last year. The Chinese yuan climbed 0.4 percent to 6.2940 a dollar on Dec. 30, rising beyond 6.3 per dollar for the first time in 18 years.
Spreadtrum Communications Inc., a Shanghai-based mobile chip designer, declined the most among companies in the Bloomberg benchmark gauge. Its shares slid 6.1 percent in New York trading, the most in two weeks, to $19.61.
Spreadtrum may lower estimates for the first quarter of 2012 due to lower-than-expected “feature phone” sales in China and India in December, Jun Zhang, an analyst at Wedge Partners, wrote in a note yesterday. Investors may have concerns about “falling inventory levels amid an increase in accounts receivable,” he said.
--Editors: Marie-France Han, Glenn J. Kalinoski
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