Bloomberg News

Oil Trumps Slowdown Concerns as Cnooc Advances: China Overnight

March 23, 2012

Chinese stocks traded in New York climbed, paring a weekly drop, as concern Iranian oil exports will decline bolstered energy companies and overshadowed signs the world’s second-largest economy is continuing to slow.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. added 0.7 percent to 104.61 by 2:39 p.m. in New York, reducing the weekly decline to 0.2 percent. PetroChina Co. (PTR), the nation’s second-largest oil refiner, and Cnooc Ltd. (883), the biggest offshore oil explorer, both rose from two-month lows. Online retailer Vipshop Holdings Ltd. (VIPS) slid 12 percent after raising less than targeted in the first initial public offering by a Chinese company in the U.S. since August.

Oil jumped almost $3 a barrel in New York as Reuters reported Iran’s crude exports will drop by 300,000 barrels a day in March because of tighter sanctions linked to its nuclear program. The surge spurred the Bloomberg gauge of U.S.-listed Chinese equities to reverse an earlier drop of as much as 0.3 percent. Data from home prices to manufacturing this week have added to concern over China’s economy, which grew the least for 10 quarters in the last three months of 2011.

“The number one driver of markets in the next few months will be the Middle East, and it’s going to be reflected in commodity prices,” Simon Quijano-Evans, an emerging-markets economist at ING Groep NV, said by phone from London. “This week has been a profit-taking week after all the rally that we’ve seen.”

Slower Pace

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., was unchanged at $36.89, the lowest level since Jan. 13, after declining 4.9 percent in the week. The Standard & Poor’s 500 Index (SPX) rose 0.3 percent, its first advance in four days, cutting the weekly loss to 0.5 percent.

An index of leading indicators in China rose at a slower pace in February compared to a month earlier, adding to evidence of moderating growth in the world’s second largest economy. The gauge increased 0.8 percent to 227.2, according to a preliminary reading from the Conference Board. That compares with a 1.5 percent gain in January that was revised down from 1.6 percent.

Vipshop (VIPS), a Guangzhou, China-based online retailer, plunged 12 percent to $5.75 on its first day of trading. The company raised $71.5 million by selling 11 million American depositary receipts for $6.50 each, according to a PR Newswire statement yesterday. The retailer was seeking as much as $117.3 million by offering 11.2 million ADRs for $8.50 to $10.50.

‘Below What We Thought’

“The market environment isn’t very good and the IPO price was below what we thought would be a fair price for our company stock,” Eric Shen, Vipshop’s chief executive officer, said in a phone interview yesterday.

Beijing-based PetroChina gained 1.2 percent to $142.30 in New York, trimming its weekly decline to 3.8 percent. The Hong Kong shares were unchanged at HK$11.04, the equivalent of $1.42. Each American depositary receipt is equal to 100 ordinary shares.

ADRs of Beijing-based Cnooc gained 1.1 percent to $211.75. Each depositary receipt is equal to 100 ordinary shares, which dropped 1 percent to HK$16.38, the equivalent of $2.11, in Hong Kong trading.

Crude oil for May delivery rose $1.72, or 1.6 percent, to $107.07 a barrel by 1:55 p.m. on the New York Mercantile Exchange. Earlier, it touched $108.25 a barrel.

China Unicom Jumps

ADRs of China Unicom (Hong Kong) Ltd. (CHU), the nation’s second- largest mobile-phone company, gained 4.3 percent to $17.04, poised for the biggest advance since Nov. 30 and cutting the weekly loss to 3.5 percent. China Unicom’s Hong Kong shares advanced 0.9 percent to HK$13.24, the equivalent of $1.70. Each ADR is equal to 10 ordinary shares.

The Hong Kong-based mobile provider said it will boost capital spending to expand its network by 30 percent to 100 billion yuan ($16 billion) in 2012. Investors expect “Unicom to still gain market share” as it expands its network, Jun Zhang, an analyst at Wedge Partners, said by phone from Santa Clara, California. The company had 40 million subscribers on its third- generation, or 3G, network at the end of last year.

The Hang Seng China Enterprises Index (HSCEI) of mainland shares listed in Hong Kong lost 1 percent to 10,658.07, extending its losing streak to an eighth day, the longest run of losses since July. The gauge is down 5 percent in the week. The Shanghai Composite Index (SHCOMP) fell 1.1 percent for a 2.3 percent weekly decline.

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@bloomberg.net; Belinda Cao in New York at lcao4@bloomberg.net;

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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