Chinese stocks traded in the U.S. fell, led by Ctrip.com International Ltd. (CTRP:US), as skepticism that Spain’s bailout plan will help tame Europe’s debt crisis outweighed speculation that China’s higher-than-estimated new lending may help stem a slowdown in its economy.
The Bloomberg China-US Equity Index (SHCOMP) of the most-traded Chinese companies in the U.S. dropped 0.3 percent to 90.00 yesterday in New York, erasing the year’s gain. Ctrip tumbled to a three-year low after Mirae Asset Securities Hong Kong Ltd. downgraded China’s biggest online travel agency to hold from buy. Focus Media Holding Ltd. (FMCN:US) lost 5.3 percent and Home Inns & Hotels Management Inc. dropped the most in a month after Goldman Sachs Group Inc. cut its price estimate.
Spain’s 10-year bond yield climbed the most in almost a month yesterday as optimism faded that the nation’s 100 billion euro ($125 billion) bank bailout will stop Europe’s debt crisis from spreading. Chinese lenders extended 793.2 billion yuan ($125 billion) in new loans in May, the People’s Bank of China said, compared with the 700 billion yuan median forecast in a Bloomberg survey of 29 economists. May exports and import growth also topped estimates, data showed on June 10.
“There’s a lot weighing on investors’ minds beside Chinese growth figures, even though the import and export numbers were positive,” Christopher Palmer, who helps manage $2.5 billion of assets as London-based director of global emerging markets for Henderson Global Investors Ltd., said by phone yesterday. “Investors are still hesitant to commit to China having been told that things were OK in Europe, which is its biggest trading partner, and now finding out that Spain needs a bailout.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest U.S.- listed China exchange-traded fund, dipped 0.1 percent to $32.79 in its second day of declines. The Shanghai Composite Index of mainland stocks added 1.1 percent to 2,305.86, snapping a three- day slump. The Standard & Poor’s 500 Index of U.S. shares lost 1.3 percent to 1,308.93, the biggest slump in a week.
Inflation in China slowed to 3 percent in May from 3.4 percent in April and from 5.5 percent in May 2011, the government reported June 9. Production increased 9.6 percent, lower than a projected 9.8 percent gain, and retail sales climbed 13.8 percent.
The central bank cut benchmark interest rates last week for the first time since 2008 after the economy expanded at the slowest pace in 11 quarters in the January-March period, and May consumer prices rose the least in two years.
Shanghai-based Ctrip sank 8.6 percent to $17.06.
Home Inns, Focus Media
Eric Wen, a Hong Kong-based analyst at Mirae Securities, cut (CTRP:US) the price target for the stock to $21 from $28 as he reduced his recommendation rating on the company.
Shanghai-based Home Inns (HMIN:US), China’s biggest hotel chain operator, slid 4.7 percent in its second day of decline to $20.88. Justin Kwok, a Hong Kong-based analyst at Goldman Sachs, yesterday reduced his 12-month price target for the company to $30 from $37.
Focus Media, a digital advertising company based in Shanghai, dropped 5.3 percent, the most in a week, to $19.42.
“I’m less bearish on Chinese stocks than I was three months ago,” John-Paul Smith, Deutsche Bank AG’s London-based emerging-market strategist, said by phone yesterday. “Chinese stocks have retreated a lot already in the past few months and investors’ expectations for what the Chinese economy and stocks will likely do this year are less unrealistic now than in the first two months of the year.”
The slump in the Bloomberg China stock measure erased its gains this year for a 0.1 percent loss. Twenty-seven companies in the gauge declined yesterday while 24 advanced.
China Unicom (CHU:US) (Hong Kong) Ltd., the nation’s second-largest wireless carrier, jumped the most in six weeks after its parent agreed to buy back a 4.6 percent stake from Spain’s Telefonica SA.
Unicom’s American depositary receipts rose 3.2 percent to $13.98, the steepest gain since April 26. The ADRs, each representing 10 underlying shares in the company, traded 1.9 percent below (CHU:US) its Hong Kong stock, the widest discount in three weeks. Its shares jumped 6.6 percent in Hong Kong yesterday to HK$11.06, or $1.43, the biggest increase in nine months.
The company’s parent China United Network Communications Group Co. agreed to buy 1.07 billion shares in the listed unit from Madrid-based Telefonica, Beijing-based Unicom said in a June 10 filing to the Hong Kong stock exchange. The deal, pending regulatory approval, will probably be completed by the end of July, Unicom said.
Telefonica (TEF) cut its Unicom holdings to 5 percent from 9.7 percent as Spain’s biggest phone company is under pressure to reduce more than 57 billion euros in net debt. It agreed not to sell any further Unicom shares for 12 months, the companies’ June 10 statements showed.
Shanda Games Ltd. (GAME:US), China’s third-biggest online games operator, strengthened 0.2 percent to $4.05, extending a three- day rally.
Shanda’s first-quarter sales rose 10.9 percent from a year earlier to 1.39 billion yuan, the company said in a statement after U.S. markets closed yesterday. That compared with the 1.41 billion yuan average estimate of two analysts compiled by Bloomberg. Adjusted earnings were 1.36 yuan per share, compared with 1.3 yuan a year ago and 1.2 yuan in the prior quarter, the company said.
The Shanghai-based company’s ADRs added 1.2 percent to $4.10 in after-market trading.
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