Solar stocks led a decline in Chinese shares traded in New York on speculation that Italy will follow Germany in cutting subsidies to the industry, dimming the outlook for global installations.
LDK Solar Co. tumbled the most in four days while Trina Solar Ltd. (TSL:US) dropped to a two-week low. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. lost 0.3 percent to 105.42 yesterday, falling for the first time in three days. China Petroleum & Chemical Corp., Asia’s largest refiner, traded at its biggest discount to Hong Kong shares in three months.
Italy, the world’s second-largest solar market, is proposing to cut its industry subsidy by 50 percent, Citigroup Inc. technology analyst Timothy Arcuri said in a research note e-mailed yesterday, citing a first draft of the European nation’s fifth energy plan that the bank had obtained. Germany, the biggest solar market, will reduce aid to the industry by as much as 29 percent from April 1.
“Solar stocks’ trading reacted to the news on the subsidy cut in Italy where solar sales normally offer manufacturers higher margins,” Chris Kettenmann, an analyst at Miller Tabak & Co LLC in New York said by phone yesterday. “The reductions in subsidies in Germany and Italy would be absorbed by cost cutting at Chinese solar makers.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., retreated 0.2 percent to $37.25, after climbing the most in two weeks on March 26.
LDK, a solar wafer producer based in Xinyu in Jiangxi province, slid 5.4 percent to $4.24, the biggest daily drop since March 21. Trina, China’s fifth-largest solar-panel supplier based in Changzhou in the eastern Jiangsu province, lost 2.7 percent to $7.44, the lowest level since March 12. Suntech Power Holdings Co., the world’s largest solar-panel maker, sank 1.6 percent to a two-week low of $3.05.
The cost of photovoltaic subsidies in Italy is higher than Citigroup had estimated, Arcuri said, citing the Italian energy document. The plan indicates “a significant slowdown in the market, and the ongoing ad-hoc nature of cuts in Germany and Italy means financing for big projects in Europe will remain challenging,” analysts led by Arcuri wrote in the report.
American depositary receipts of China Petroleum & Chemical Corp. (SNP:US), known as Sinopec, retreated 0.9 percent in its first decline in three days, to $112.40 as oil futures rose for a third day on the New York Mercantile Exchange. The ADRs, each representing 100 common shares in Sinopec, traded 1.3 percent below (SNP:US) its Hong Kong stock, the biggest discount since Dec. 19.
The company, Asia’s largest refiner, added 0.8 percent to HK$8.84 in Hong Kong, or $1.14 per share, while shares climbed 0.1 percent to 7.45 yuan in Shanghai trading, the equivalent of $1.18.
The refiner plans to boost oil output in western China and increase exploration for unconventional resources including gas from shale formations, it said in a statement March 26, as fourth-quarter profit dropped 23 percent, missing the mean forecast of seven analysts, on refining losses.
The Shanghai Composite Index (SHCOMP) slipped 0.1 percent to a six- week low of 2,347.18 yesterday. The Hang Seng China Enterprises Index (HSCEI) for Chinese companies traded in Hong Kong added 2.1 percent, snapping a nine-day slump, to 10,811.07.
E-Commerce China Dangdang Inc. (DANG:US), China’s biggest Internet bookseller known as Dangdang, jumped 9.5 percent to $8.17, the highest level since Jan. 27.
Andy Yeung, a New York-based analyst for Oppenheimer & Co. raised (DANG:US) Dangdang to outperform from market-perform yesterday, indicating he expects it to gain more than the market. Yeung set a price target of $9.50 over the next 12 to 18 months. Wallace Cheung, a Hong Kong-based analyst at Credit Suisse AG, also lifted Dangdang’s price target to $9 from $8.60, while maintaining an outperform rating.
Dangdang’s ADRs have jumped 86 percent this year because investors prefer the company over less cash-rich e-commerce businesses as credit conditions in China tighten, according to Tian X Hou, founder and chief executive officer of T.H. Capital LLC, a research firm focusing on U.S.-listed Chinese stocks.
Vipshop Holdings Ltd. (VIPS:US), a Guangzhou-based online discount retailer, raised 39 percent less than was targeted on March 23 in the first initial public offering by a Chinese company in the U.S. in seven months. The shares fell 2.1 percent to $4.60 yesterday.
The e-commerce industry is “showing signs of improvement as difficult funding conditions in the past year begin to curtail irrational price wars and aggressive promotions,” Oppenheimer’s Yeung wrote in a research note yesterday. “Dangdang is one of the favorite e-commerce brands, a top five business-to-consumer website that reaches 16 million to 20 million users per month. Dangdang has under-monetized its user base and traffic.”
The Standard & Poor’s 500 Index (SPX) declined 0.3 percent to 1,412.52 after the Conference Board’s consumer confidence index dropped to 70.2 from a revised 71.6 reading in February, failing to encourage investors after the gauge advanced to an almost four-year high earlier.
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