Chinese Internet stocks gained in New York, on prospects Facebook Inc. (FB:US)’s increased offering price will spur demand for industry assets while Yanzhou Coal Mining Co. (YZC:US)’s discount swelled as coal prices fell.
Renren Inc. (RENN:US), a social networking website, climbed the most in a month, and Internet bookstore E-Commerce China Dangdang Inc. (DANG:US) posted the steepest advance in three weeks. American depositary receipts of Yanzhou traded at the biggest discount to the shares in Hong Kong since December as coal prices fell for the first time in three years. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. extended its nine-day slump to 9.2 percent.
China’s Internet stocks benefited from Facebook’s decision to increase the price range on its IPO to as much as $38 a share from $35, implying a market value of as much as $104.2 billion. That would make Facebook worth more than Citigroup Inc. (C:US) and McDonald’s Corp. Beijing-based Renren reported yesterday a first-quarter loss of 3 cents a share, below the median forecast (RENN:US) for 4 cents a share by eight analysts surveyed by Bloomberg.
“All the talk on the street about Facebook is driving retail investors in particular to look for stocks that might gain on social media in China,” Echo He, a New York-based analyst who covers Chinese Internet stocks for Maxim Group LLC, said in a phone interview. “Renren’s second-quarter outlook is weak because advertising is weak, but investors are hoping it can do as well as Facebook.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., was little changed at $34.72 while the Standard & Poor’s 500 Index slid 0.6 percent to 1,330.66.
German, U.S. Data
Germany’s economy expanded more than forecast in the first quarter, offsetting contractions elsewhere in Europe and helping the region, China’s largest trading partner, avoid a second recession in three years.
U.S. auto sales running at the fastest pace in four years helped boost manufacturing in the New York region in May more than forecast while strengthening the outlook for a U.S. economic recovery.
“Investors do remain very nervous but a better outlook for the U.S. economy is certainly helping to calm matters,” Charlie Awdry, portfolio manager of Henderson Global Investors’ 500 million pound ($800 million) China Opportunities Fund, said in a phone interview from London. “We still think Chinese earnings are going to grow, though at a slow pace.”
Foreign direct investment in China fell for a sixth month in April, the longest stretch of declines since the global financial crisis, amid renewed turmoil in financial markets.
Renren added 6.4 percent to $6.38. The company said yesterday it will probably report second-quarter revenue of $41 million to $43 million, missing a $46 million median forecast (RENN:US) of seven analysts in a Bloomberg survey.
Second-quarter performance “remains very soft” as a result of the country’s slowing economy, Chief Executive Officer Joseph Chen said in an investor conference call yesterday. “We have not seen much rebound in sentiment and expenditures from advertisers,” he said.
E-Commerce, known as Dangdang, which reports first-quarter earnings before the market opens tomorrow, jumped 9.5 percent, the most since April 25, to $7.40. The Beijing-based company, which has gained 67 percent in 2012, is expected to report a non-GAAP loss (DANG:US) of 20 cents per share for the last quarter, according to seven analysts in a Bloomberg survey.
AutoNavi Holdings Ltd. (AMAP:US), a Chinese provider of digital map and navigation services, surged 6.5 percent to $11.50, the most in two months, after reporting first-quarter net revenue of $35.7 million, compared with a $33 million median forecast (AMAP:US) by two analysts.
Yanzhou Coal, China’s fourth-largest producer, rose 0.8 percent to $17.86 in New York yesterday. The ADR traded at 4.1 percent discount to its shares in Hong Kong, where they gained 2.7 percent yesterday to HK$ 14.46, or the equivalent of $1.86. The discount was the biggest since Dec. 8. One ADR represents 10 ordinary shares.
The price of Chinese coal for power stations fell for the first time in three years in May, data compiled by the China Coal Transport and Distribution Association on May 14 showed.
WuXi PharmaTech (WX:US), China’s biggest medical contract researcher, led declines yesterday, dropping 6.6 percent to $14.01.
The U.S. China Index fell 0.2 percent to 95.24 in New York yesterday.
The Shanghai Composite Index retreated 0.2 percent yesterday to 2,374.84 while the Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong broke a string of eight consecutive declines, gaining 1 percent to 10,084.59.
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