Noah Rises as N.Y. Index Reaches Two-Month High: China Overnight
January 25, 2012, 12:26 AM ESTBy Belinda Cao
Jan. 24 (Bloomberg) -- Chinese stocks in the U.S. rose, pushing the benchmark index to a two-month high, on speculation the government will roll out more measures to spur growth.
The Bloomberg China-US 55 Index of the most-traded Chinese stocks in the U.S. climbed 0.5 percent to 101.81 in New York, the highest level since Nov. 15. Wealth Manager Noah Holdings Ltd. jumped 5.1 percent after short-sale interest in the company’s U.S.-traded stock dropped to an 11-month low last week. Aluminum Corp of China, known as Chalco, climbed to the strongest level in two months as metals prices rose.
Chinese Premier Wen Jiabao said last week that the government wants to stabilize living costs while maintaining a steady pace of economic development, according to the official Xinhua News Agency. Growth in the world’s largest exporting economy eased to the slowest pace in 10 quarters in the last three months of 2011, boosting speculation that policy makers will further loosen controls on lending and credit.
“We’ll see a better-than-expected stock market this year,” Ronald Wan, a Hong Kong-based managing director at China Merchants Securities Co., said in an interview with Bloomberg Television yesterday. “The Chinese government wants to maintain a relative moderate growth for the economy” and it may adopt stimulus measures to meet the goal, he said.
Wan said China’s central bank may start to cut interest rates beginning in the second quarter this year. The People’s Bank of China, which lowered banks’ reserve ratios for the first time since 2008 last month, hasn’t moved the nation’s benchmark 6.56 percent lending rate since July.
Chalco Advances
Chalco, China’s largest producer of the metal, gained 2 percent to $13.19 in New York as commodity prices rose. Aluminum for three-month delivery advanced 1 percent to $2,238 a ton on the London Metal Exchange, after surging 11 percent over the past five weeks.
Speculators raised bets on higher metal prices by the most since July on signs of growth in the U.S., increasing demand in China and more confidence in Europe.
Money managers increased combined net-long positions in five industrial and precious metals by 13 percent to 152,665 futures and options in the week ended Jan. 17, Commodity Futures Trading Commission data show. The Standard & Poor’s GSCI Spot Index of 24 commodities has risen 2.2 percent this month, led by silver, zinc and aluminum.
Chinese equities traded in the U.S. also rose amid a rally in emerging-market stocks, as Germany and France said Greek-debt swap talks are making progress. The MSCI Emerging Markets Index gained 0.5 percent to 999.64, the highest level since Oct. 28.
Equity Inflows
More than $600 million flowed into Chinese equity funds in the week ended Jan. 18, the most for any week since April 2010, according to a Jan. 20 report by Boston-based researcher EPFR Global. Emerging-market equity funds took in more than $1 billion for the second week “on the back of renewed interest in China,” EPFR Global said.
Slower growth in China “is beginning to take some of the pressure off prices, thereby affording policy makers room to support growth,” the report said.
The People’s Bank will allow the five biggest banks to boost first-quarter lending by as much as 5 percent from a year ago, two people at state lenders who declined to be identified because the move hasn’t been announced said last week.
The Standard & Poor’s 500 Index added less than 0.1 percent to 1,316, after rising 2 percent last week. The Shanghai Composite Index climbed 1 percent to 2,319.12 on Jan. 20. Mainland Chinese markets are closed this week for the Lunar New Year holiday, while Hong Kong’s are shut to Jan. 25.
Short Selling
Noah Holdings, based in Shanghai, rose 17 percent over the past two trading days to a one-month high of $6.85.
Short-selling interest in the company was 10.7 percent of its outstanding shares on Jan. 19, after falling to 10.5 percent the day before, the lowest level since February, according to Data Explorers, a New York-based research firm. The ratio has retreated from 19.4 percent on Nov. 30.
In a short sale, an investor borrows a security and sells it, expecting to profit from a decline by repurchasing it later at a lower price.
The company appointed Harry B. Tsai, formerly the chief operating officer at ABN Amro NV’s China unit, as chief operating officer, according to a statement on Jan. 12.
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., increased 0.4 percent to $38.83 yesterday, after rising 5.3 percent last week. The yuan weakened 0.4 percent on Jan. 20 to 6.339 per dollar in Shanghai.
Youku Inc., owner of China’s largest video sharing website, advanced 3.8 percent to $21.76, the highest level since Oct. 28.
Evan S. Wilson, an analyst at Pacific Crest Securities Inc., reiterated a recommendation of “sector perform” for the stock on Jan. 22. Five out of 11 analysts rated the company a “buy” and four gave it a “hold” rating, according to data compiled by Bloomberg.
--Editors: Brendan Walsh, Emma O’Brien
To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net
To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net
