Suntech Power Holdings Co. (STP:US) led advances in Chinese stocks, sending the benchmark index to the highest level in three weeks, after Japan introduced incentives to encourage greater use of clean energy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. climbed 1.1 percent to $92.39 at the close of trading in New York, the highest since May 29. Suntech, the world’s biggest solar manufacturer, surged the most in three months after Japan announced the subsidies will go into effect July 1. Elong Inc. (LONG:US), a Chinese online travel company whose largest shareholder is U.S.-based Expedia Inc. (EXPE:US), had the biggest gain in 11 weeks after announcing a share buyback.
Japan Industry Minister Yukio Edano yesterday set a premium price for solar electricity that’s about triple what industrial users now pay for conventional power. That may spur at least $9.6 billion in new installations with 3.2 gigawatts of capacity, Bloomberg New Energy Finance forecast. Suntech acquired Japanese company MSK Corp. in August 2006.
“These kind of subsidies are a positive factor for the solar industry,” Mehdi Hosseini, an analyst at Susquehanna Financial Group LLLP in San Francisco, said yesterday by phone. “Suntech is better positioned than other Chinese solar companies to benefit from increased demand in Japan because consumers there are likely to prefer a local brand name.”
China Eastern Airlines Corp. (CEA:US), the nation’s second-biggest carrier by passengers, gained the most in three weeks after the company said total cargo volumes increased 11 percent in May, the most since February.
China ETF Gains
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., rose 0.3 percent to $34.57 while the Standard & Poor’s 500 Index (SPX) added 0.1 percent to 1,344.78. The Shanghai Composite Index (SHCOMP) gained 0.4 yesterday to 2,316.05 and the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong advanced 0.8 percent to 9,818.76, the highest price this month.
The dividend yield of the Hong Kong Hang Seng Index rose above 4 percent this month, a level that had only been reached four other times since 1993, coinciding with the benchmark’s trough, according to data compiled by Bloomberg. The average yield of companies on the gauge surpassed 4 percent in October as the European debt crisis deepened. The index followed with a 23 percent surge in the next four months.
Greek election winner Antonis Samaras raced to build a coalition to keep bailout aid flowing as officials in Europe, China’s largest trading partner, indicated a willingness to ease rescue terms. The world’s second-largest economy cut its benchmark interest rates on June 7 for the first time since 2008 while the U.S. Federal Reserve will meet today and tomorrow to consider stimulus measures as unemployment remained above 8 percent for 40 consecutive months.
“Investors have been looking for an excuse for a relief rally, and the news out of Europe is at least good enough to trigger it,” Elena Ogram, who manages $50 million in emerging market assets, including Chinese stocks, at Bank am Bellevue AG in Zurich, said by phone. “China eased credit last week, and without a comprehensive solution in Europe, investors are looking to the U.S. Fed and other central banks to boost liquidity.”
Suntech advanced 9.2 percent to $2.01, a four-week high, and LDK Solar Co. (LDK:US), the world’s second-largest maker of wafers, rose 1.8 percent to $2.21, its highest price since May 25.
Japanese utilities will pay 42 yen (53 cents) a kilowatt- hour for 20 years to solar power producers, almost twice the rate in Germany, the world’s biggest market by installations. The solar tariff was among incentive rates for clean energy announced yesterday by the Ministry of Economy, Trade and Industry.
China Eastern gained 6.3 percent to $15.26 while China Southern Airlines Co. (1055), Asia’s biggest carrier by passenger numbers, added 6.3 percent to $21.48 as its cargo traffic increased 13 percent in May, also the most since February.
Elong, China’s second biggest online travel company, jumped 4 percent to $11.22 after saying it may spend as much as $30 million to buy back its own shares.
China Medical Technologies Inc. (CMEDY:US) posted the biggest two-day drop since April in New York after Stroock & Stroock & Lavan LLP said bondholders of the Beijing-based medical device company filed a petition for liquidation.
American depositary receipts (CMEDY:US) of China Medical traded on the U.S. over-the-counter market dropped 8.6 percent to $4.65 yesterday in New York, after tumbling 14 percent on June 15.
Debt holders of China Medical directed Wilmington Trust to file a so-called winding-up petition with the Grand Court of the Cayman Islands on June 15, Jayme Goldstein, a lawyer at Stroock & Stroock & Lavan said by phone yesterday, adding his firm represents individual bond holders in the case. He declined to name his clients or give further details, citing the firm’s policy.
E-mailed messages sent after hours to China Medical’s investor relations manager and the company’s general information address weren’t returned.
SouFun Holdings Ltd. (SFUN:US), owner of the country’s biggest real estate website, rose 2.4 percent to $18.00, advancing for the fifth day in six after data showed China’s home values fell in a record 54 of 70 cities tracked by the government in May as developers cut prices to boost sales. Soufun has advanced 23 percent this year after losing 18 percent in 2011.
AsiaInfo-Linkage Inc. (ASIA:US), which sells telecommunication software to China’s biggest wireless carriers, slipped 2.3 percent to $12.50 a day after gaining 15 percent after Reuters said the company may be acquired in a deal valued at more than $1 billion. The Beijing-based company will have “no further comments to provide to the public as we are still in the middle of the potential deal,” Jimmy Xia, AsiaInfo’s investor relations director, said yesterday in a voice-mail message.
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