Bloomberg News

Melco Boosts Premium as U.S. Jobs Buoys Stocks: China Overnight

January 24, 2012

Jan. 20 (Bloomberg) -- Most Chinese stocks in the U.S. rose, and Melco Crown Entertainment Ltd. traded at the biggest premium to its Hong Kong shares in a week, as plunging U.S. jobless claims and speculation China will loosen curbs on lending bolstered the outlook for the world’s largest exporter.

The Bloomberg China-US 55 Index of the most-traded Chinese stocks in the U.S. was little changed at 101.20 yesterday, as 35 companies gained and 20 declined. Melco surged to a two-month high, giving the casino operator the biggest premium of dual- traded stocks, on prospects the company is seeking loans to fund a new project in Macau. Video sharing website Youku Inc. jumped as much as 11 percent after a report showed that online video use increased last year.

Claims for unemployment benefits in the U.S. sank to the lowest level in almost four years last week, data released yesterday showed, signaling consumer spending in China’s second- biggest trading partner may rebound. Chinese policy makers, under pressure to ignite the economy after growth eased to the slowest pace in 10 quarters in the last three months of 2011, are relaxing loan limits and mulling looser capital requirements, said people with knowledge of the matter who asked not to be identified because it hasn’t been announced.

“Global markets have performed strongly because investors have put aside European concerns and focused on strong U.S. data,” said Kevin Pollack, a fund manager at Paragon Capital LP in New York, which invests in U.S.-listed Chinese stocks. “There is increased investor confidence that the central bank will ease credit.”

China ETF Climbs

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 0.7 percent to $38.60, the highest level since Nov. 8. The Standard & Poor’s 500 Index added 0.5 percent to 1,314.50 yesterday, its third day of advances, while the Shanghai Composite Index climbed 1.3 percent to 2,296.08.

Melco Crown is seeking a loan to finance its Studio City project in Macau, the former Portuguese colony that is the only place in China where public gambling is allowed, according to four people familiar with the matter who asked not to be identified as the details are private. The loan may be about $1.25 billion, two of the people said.

The company’s American depositary receipts, each representing three common shares in the Hong Kong-based company, gained 3.1 percent to $11.17, the highest level since Nov. 8. The ADRs traded at a 2.6 percent premium over Melco Crown’s Hong Kong stock, which rose 2.2 percent to HK$28.15, the equivalent of $3.63 per share.

Online Video Users

Studio City will be an integrated resort with a “theme and demographic focus” aimed at differentiating it from the company’s existing portfolio of assets, according to Melco Crown’s website. The company is about three to four weeks away from hiring banks, the people said.

Beijing-based Youku, owner of China’s biggest video website, jumped 4.8 percent to $20.62 in New York, the highest close since Nov. 8. Its competitor Tudou Holdings Ltd. climbed 4.4 percent to one-week high of $12.21.

Online video users in China increased 15 percent to 325 million in 2011, and the rate of usage rose to 63.4 percent while visits to most other entertainment websites declined, China Internet Network Information Center said in a Jan. 16 report.

Nomura Securities Co. maintained a “buy” recommendation on Youku yesterday and a 12-month price target of $53. Brean Murray Carret & Co. kept a “hold” rating on the stock.

Sinopec Shanghai

ADRs of China Southern Airlines Co., Asia’s biggest carrier by passenger numbers, rose 1.5 percent in their first advance in three trading days to $26.25. The Guangzhou, southern China- based airline plans to expand capacity by about 10 percent this year to match a projected rise in traffic growth, Chief Financial Officer Xu Jiebo said yesterday in an interview.

Sinopec Shanghai Petrochemical Co., a unit of China’s largest oil refiner, fell the most in more than two months after saying that 2011 earnings probably slid as much as 70 percent. The company’s ADRs dropped 5.3 percent to $36.84 in New York, after shares in Hong Kong slipped 4.7 percent to HK$2.83, or the equivalent of 36 U.S. cents. Each ADR represents 100 shares.

The Shanghai-based subsidiary of China Petroleum and Chemical Corp., known as Sinopec, said net income for 2011 probably fell 50 percent to 70 percent from 2010, according to a statement yesterday to the Hong Kong Stock Exchange. The forecast was based on preliminary estimates, the company said.

2011 Earnings

AsiaInfo-Linkage Inc., which provides software to telecommunications companies, was the second-best performer on the Bloomberg China-US 55 index yesterday, jumping 15 percent to $9.92, the most since Oct. 4. The Beijing-based company will release financial results for the fourth quarter and 2011 on Feb. 13, it said in a statement yesterday.

The average estimate of eight analysts surveyed by Bloomberg is for earnings of 33 U.S. cents a share, compared with the company’s forecast on Oct. 31 of as little as 30 cents. Analysts predict that fourth-quarter sales rose 18 percent from a year earlier to $129 million, in line with the company’s guidance of $127 million to $131 million.

--Editors: Emma O’Brien, Brendan Walsh

To contact the reporter on this story: Belinda Cao in New York at

To contact the editor responsible for this story: Emma O’Brien at

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