Chinese Internet stocks slumped in the U.S. on speculation declining profit for Facebook Inc. (FB:US) and Apple Inc. (AAPL:US)’s drop to a six-week low signal that the information technology sector is faltering.
Renren Inc. (RENN:US), a Chinese social networking website, fell the most in more than two months, while China’s biggest online search engine Baidu Inc. (BIDU:US) slid to the lowest since March 7 and extended declines after normal trading hours after forecasting second-quarter sales growth below analysts’ estimates. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. sank 0.3 percent to 100.63 in in New York.
Facebook, the world’s largest social network site, said yesterday that net income in the first three months of 2012 slid 12 percent as revenue growth slowed and marketing costs more than doubled. Shares of Apple, the maker of iPhones and iPads, extended a five-day drop to 8.1 percent before reporting a doubling in earnings. Renren has surged 78 percent in 2012 and Baidu has climbed 17 percent, beating an 11 percent gain in the gauge of U.S.-listed Chinese companies.
“Technology stocks have been trading weaker lately as Apple’s stock dropped and Facebook’s profit decline may also have added to concern about the sector,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc. in Lisle, Illinois, which manages $700 million of assets including Chinese stocks, said by phone yesterday.
Apple slipped for a fifth day, falling 2 percent to $560.28. After markets closed, the company reported that net income in the fiscal second quarter climbed to $11.6 billion, reflecting strong demand for the iPhone in China as well as purchases of a new version of the iPad tablet.
China ETF Climbs
The IShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S. rose for the fifth time in six days, climbing 0.5 percent to $37.19. The Standard & Poor’s 500 Index (SPX) gained 0.4 percent to 1,371.97 as new U.S. home sales in March came in stronger than economists estimated and company earnings from AT&T Inc. to 3M Co. exceeded analysts’ forecasts.
Renren’s American depositary receipts sank 6.6 percent, the biggest decline since Feb. 1, to $6.32 yesterday.
ADRs of Beijing-based Baidu fell 2.7 percent to $135.83 in New York yesterday. After the close of U.S. markets, Baidu reported (BIDU:US) that first-quarter profit rose 76 percent, meeting analyst estimates, as spending by bigger customers fueled higher sales of online advertising.
Revenue is expected to rise to between 5.34 billion yuan ($847 million) and 5.46 billion yuan in the second quarter, Baidu said in a statement yesterday. That compares with a 5.48 billion yuan average of analysts’ estimates compiled by Bloomberg.
Baidu slid a further 12 percent in after-hours (BIDU:US) ADR trading to $121.40 by 5:30 p.m. in New York.
E-Commerce Dangdang Inc., known as Dangdang, dropped for a third day, retreating 7.2 percent to $7.50, the lowest level in almost a month. The declines trimmed 2012 gains for the nation’s biggest online book seller to 70 percent.
The Shanghai Composite Index (SHCOMP) was little changed at 2,388.83 yesterday, while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong was also steady at 10,817.16.
Cnooc Ltd. (883), China’s biggest offshore oil explorer, said in a statement yesterday that revenue rose 3.7 percent to 48.84 billion yuan in the first quarter as higher crude prices countered a 6.3 percent drop in production after oil spills shut China’s largest field in September. The Beijing-based company, which gets almost all its income from oil and gas production, didn’t report first-quarter earnings.
China Eastern Boost
Cnooc’s ADRs slipped 0.7 percent to $203.71 in New York, falling for a third day. The company’s Hong Kong stock dropped 0.3 percent yesterday to HK$15.96, or $2.06 per share. Each ADR represents 100 underlying shares in the company.
China Eastern Airlines Corp. (CEA:US) climbed the most in four months in U.S. trading as Goldman Sachs Group Inc. (GS:US) said it expects the country’s second-largest carrier by passengers to make a “small profit” in the first quarter.
China Eastern, scheduled to report its earnings for the first three months of 2012 on April 27, jumped 5.1 percent to $15.42, the biggest one-day advance since Dec. 16. Shares traded in Hong Kong rose 4.8 percent to $HK2.40 (31 U.S. cents).
Goldman reiterated its buy rating on China Eastern as analysts led by Hino Lam said investors “may have turned too bearish” on the shares after the company said on April 13 that first-quarter profit probably fell more than 50 percent because of slower economic growth and higher fuel prices.
China Auto Rental Holdings Inc. (CARH:US), striving to become the second Chinese company to undertake an initial public offering in the U.S. this year, may raise less than planned after struggling to attract investors, said two people with knowledge of the situation said yesterday, declining to be identified as the deliberations were in progress.
The car-rental company may reduce the price sought as only about half the order book for the initial public offering was covered early yesterday, the people said. China Auto is offering 11 million ADRs for $10.50 to $12.50 each, regulatory filings show.
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