Bloomberg News

Unicom Leads N.Y. Index’s Drop as Huaneng Falls: China Overnight

January 12, 2012

Jan. 12 (Bloomberg) -- Chinese stocks traded in the U.S. fell for the first day in three on concern slumping property prices and Europe’s debt crisis may hamper growth in the world’s second-largest economy.

The Bloomberg China-US 55 Index retreated 0.2 percent yesterday from a one-month high to 100.57 as trading closed in New York. China Unicom (Hong Kong) Ltd. led declines in the measure amid concern increasing competition will hurt profit. Huaneng Power International Inc. dropped after a report said China’s power consumption growth will slow in 2012. Trina Solar Ltd. and Suntech Power Holdings Co. gained the most among peers as China plans to double solar capacity this year.

China’s economic growth probably slowed for the fourth straight quarter in the last three months, according to the median forecast of economists in a Bloomberg survey. Policy makers cut the amount of cash banks must set aside as reserves last month for the first time since 2008 to spur lending.

“In the global macro aspect, things will probably continue to be shaky in the first quarter,” said Helen Zhu, chief China equity strategist at Goldman Sachs Group Inc. in an interview with Bloomberg Television. In China, “people believe there will be some degree of policy fine-tuning. We are looking for more adjustments in banks’ reserve ratios in the first half of the year.”

CLSA Asia-Pacific Markets has turned cautious on China’s stocks because of “downside risk” to the economy as property prices fell for a fourth month. The biggest concern this year is any “dramatic” fall in real estate investment, former central bank adviser Yu Yongding said Jan. 9 in New York.

Home Prices Slump

Home prices dropped 0.25 percent last month from November, after the government reiterated plans to maintain curbs on development and purchases, according to data from SouFun Holdings Ltd. released last week.

The American depositary receipts of China Unicom, the country’s second-largest mobile carrier and the only distributor of Apple Inc.’s iPhones, sank 4 percent to $20.44, the most in a month. The China Radio Management Office said this week it granted Apple’s application for a handset that would run on the network of China Telecom Corp., the smallest among China’s three wireless operators.

China Unicom had 36.5 million 3G subscribers at the end of November while China Telecom had 33.4 million in the same period. China Telecom fell 1.8 percent to $54.87 in New York.

The Shanghai Composite Index fell 0.4 percent yesterday to 2,276.05, ending a three-day rally. The Standard & Poor’s 500 Index of U.S. stocks was little changed at 1,292.48.

Cnooc Discount

The ADRs of Cnooc Ltd., the nation’s biggest offshore oil explorer, slumped 0.6 percent to $195.50. The ADRs, each representing 100 common shares, traded at a 1.3 percent discount to its Hong Kong-listed stock, the most in two weeks.

Cnooc started drilling at its first domestic shale-gas project, joining rivals in the search for unconventional natural gas, according to a statement on its website yesterday.

Huaneng, the listed unit of China’s largest power group, declined 2.1 percent to $22.31.

China’s power-consumption growth may slow to about 8.5 percent this year as the economy expands at a weaker pace, the official Xinhua News Agency reported Jan. 10, citing Yu Yanshan, deputy director at the State Electricity Regulatory Commission. Power demand grew 11.7 percent to 4.7 trillion kilowatt-hours last year, Xinhua said.

‘Not Sustainable’

“Unless China is re-industrializing, the multiplier of gross domestic product in recent years is simply not sustainable,” Cristobal Garcia, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in an e-mailed research note yesterday. “As China’s growth continues to moderate, we expect power consumption growth to slow.”

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., has gained 5.4 percent this year after remaining steady yesterday at $36.74. The yuan was little changed at 6.3155 a dollar, according to the China Foreign Exchange Trade System.

Trina Solar, China’s fifth-largest solar-panel supplier, jumped 29 percent, the most since March 2009, to $9.43 while Suntech Power, the biggest, surged 27 percent. Yingli Green Energy Holding Co. leaped 20 percent to $4.96, also the most since March 2009.

China plans to develop 3 gigawatts of solar capacity this year, and take the total installed capacity to 15 gigawatts by the end of 2015, the National Energy Administration said on its website yesterday.

The price for polysilicon, the raw material used to make most solar panels, rose 3 percent last week, the most in eight months, Bloomberg New Energy Finance data showed.

China’s inflation may have exceeded the one-year deposit rate for the 23rd straight month in December, when consumer prices probably rose 4 percent, according to the median forecast of 26 economists in a Bloomberg survey. The data is due for release today.

--With assistance from Allen Wan in Shanghai. Editors: Marie- France Han, Glenn J. Kalinoski

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

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


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