Chinese U.S.-listed stocks advanced last week, led by Sina Corp. (SINA), on prospects the government will roll out measures to boost growth in the world’s second-largest economy at an annual meeting starting today.
The Bloomberg China-US 55 index of the most-traded Chinese stocks in the U.S. was unchanged at 108.61 on March 2 in New York, gaining 1 percent in the week.
Sina surged 21 percent last week after saying its Twitter- like Weibo service may start contributing to sales in the second half and as search engine Baidu Inc. started linking to Sina’s microblogs. Video sharing website Youku Inc. and ship operator Seaspan Corp. (SSW) jumped more than 16 percent. Focus Media Holding Ltd. (FMCN), a digital advertising company targeted by short seller Carson Block, rallied 10 percent as analysts predicted fourth- quarter sales will beat the company’s forecast.
China’s government will release its 2012 budget and Premier Wen Jiabao will deliver an address at a meeting of the National People’s Congress commencing today. While still the world’s fastest-growing major economy, China’s gross domestic product expanded at the slowest pace for 10 quarters in the three months to the end of 2011 as the European debt crisis and the sluggish U.S. economy cut demand for exports.
“They may talk about high-investment project approval and roll out measures to help the consumer as growth was a little bit slower than what they want,” Jeff Papp, a senior analyst in Lisle, Illinois, at Oberweis Asset Management Inc., which manages $700 million including Chinese stocks, said by phone on March 2.
China ETF Weekly Gain
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., was little changed at $40.27 on March 2, gaining 0.3 percent last week, after a similar slump the week before.
Shanghai-based Sina jumped 6.9 percent on March 2 to a one- month high of $74.60 in New York. It was the biggest weekly advance since the week ended Jan. 13.
Baidu, which handles more than 80 percent of search-engine queries in China, started displaying links to tweets on Sina’s microblog platform and other major social-networking websites in China, Kaiser Kuo, a spokesman at Baidu, said in an e-mail on March 2.
The “meaningful monetization” of Sina’s Weibo will start in the second half of this year, Chief Executive Officer Charles Chao said on Feb. 27 on a conference call. Weibo’s registered users rose by about 50 million to more than 300 million in the past three months, he said.
The company will start a Weibo-based display advertising system in the second quarter and several fee-based services beginning in the second half, Chao said. Weibo may contribute $20 million to $30 million to Sina’s revenue in 2012, Andy Yeung, a New York-based analyst at Oppenheimer & Co Inc. wrote on Feb. 28 in a research note.
China’s economy may grow 7 percent to 7.5 percent in 2012, after expanding 9.2 percent last year and 10.4 percent in 2010, said Donald Straszheim, head of China research in Los Angeles at International Strategy & Investment Group.
“There’s a soft landing this year in China,” he said by phone on March 2. “Equities will be higher at the end of year from where they are now.”
Baidu added 1.8 percent to a two-week high of $141.43 on March 2. The stock rose 4.9 percent last week, after sliding 1.5 percent the week before.
The Standard & Poor’s 500 Index (SPX) slipped 0.3 percent to 1,369.63, cutting its weekly advance to 0.3 percent.
Macau casino operator Melco Crown Entertainment Ltd. (MPEL) rose for a second day in New York, widening the premium over its Hong Kong stock to 3.7 percent, the highest since Feb. 2. Melco’s American depositary receipts climbed 2.9 percent to $13.39, while the stock in Hong Kong added 1.8 percent to HK$33.40 on March 2, the equivalent of $4.31 per share. The ADRs, each representing three common shares, were up 7.6 percent last week, the most since the second week of January.
ADRs of Yanzhou Coal Mining Co. (1171), China’s fourth-biggest producer of the fuel, slipped 0.7 percent to $24.48 on March 2, after Deutsche Bank AG downgraded the stock to “hold” from “buy.”
The ADRs, which represent 10 ordinary shares, fell 1.1 percent last week and traded 0.8 percent below Yanzhou’s Hong Kong stock, which rose 0.7 percent on March 2 to HK$19.14, the equivalent of $2.47. Deutsche Bank analysts cut the 12-month price target for Yanzhou’s Hong Kong-traded shares to $19.60 from $21.
Yanzhou, based in China’s Shandong province, advanced 1.8 percent to 26 yuan on March 2 in Shanghai trading, or $4.13 per share.
Benchmark thermal coal prices at Qinhuangdao, China’s biggest delivery port for the fuel, fell for the third week as of Feb. 26 as inventories continued to climb on slowing demand. Prices may fall 5 percent this year and another 10 percent in 2013 as domestic coal production outpaces demand and transport constraints ease, according to estimates by Sanford C. Bernstein & Co. published in a report on Feb. 21.
Shanghai-based Focus Media’s ADRs have rebounded 70 percent since Block’s Muddy Waters LLC research group issued its first report on Nov. 21 accusing the company of overstating the size of its advertising network and overpaying for acquisitions. Muddy Waters fifth Focus Media report on Feb. 9 carried similar allegations. The stock added 21 percent last month, the most since October.
The company may report next week that fourth-quarter sales rose to $224 million, according to the average forecast of six analysts compiled by Bloomberg. That would compare with the company’s estimate of $212 million to $214 million provided on Nov. 17. Focus Media ADRs jumped 7 percent to $26.23 on March 2 in New York, capping the best week for gains since the five days to Feb. 3.
The Shanghai Composite Index (SHCOMP) rose 1.4 percent to 2,460.69 on March 2, the highest close since Nov. 17. The gauge added 0.9 percent last week, a seventh week of gains and the longest winning streak since July 2009.
ADRs of Youku, China’s biggest video-sharing website, climbed 5.3 percent on March 2 and 16 percent last week to $26.02, the highest level since Aug. 17. Seaspan, based in Hong Kong, surged 16 percent in U.S. trading last week to a 11-month high of $19.48 after plans to boost a quarterly dividend and buy back shares spurred three analysts to reiterate “buy” recommendations.
CNinsure Inc. (CISG), a Chinese insurance agency and brokerage, tumbled to a three-month low in New York after reporting a net loss in the fourth quarter, the first since the company’s initial public offering in 2007.
CNinsure’s ADRs slid 15 percent on March 2 to $6, the biggest decline since Nov. 22. The stock lost 26 percent in the week, the biggest decline on the Bloomberg China-US 55 index.
Guangzhou, China-based CNinsure incurred a net loss of 718.6 million yuan ($114 million) in the last quarter of 2011, compared with net income of 126.5 million yuan a year earlier and profit of 78.2 million yuan in the three months to Sept. 30, 2011, the company said in a statement after U.S. markets closed March 1.
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