Bloomberg News

Mindray Medical Jumps as Policy Bets Boost ADRs: China Overnight

August 07, 2012

Chinese stocks traded in New York rose, sending the benchmark index to a one-month high, on prospects the nation’s policy makers and central banks in Europe and the U.S. will take measures to bolster their economies.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. added 1.6 percent to $91.55, the highest level since July 5. Aluminum Corp. of China Ltd. (ACH:US) advanced to a seven-week high. Mindray Medical International Ltd. (MR:US) surged the most since 2009 as the country’s biggest medical-device supplier raised its 2012 outlook. Qihoo 360 Technology Co. (QIHU:US) climbed the most since April after saying it will report second-quarter earnings in two weeks.

German Chancellor Angela Merkel on Aug. 6 backed European Central Bank President Mario Draghi’s bond-buying plan, and Federal Reserve Bank of Boston President Eric Rosengren said yesterday the central bank should pursue an “open-ended” easing program of “substantial magnitude.” The People’s Bank of China has cut interest rates twice since early June and lowered lenders’ reserve requirements as the world’s second- largest economy seeks to stem the slowest growth in three years.

“We’re not seeing global central bank coordination yet but the talk is out there, and that’s encouraging,” Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust, said by phone from Boston yesterday. “Draghi is trying to do his best to get the ECB and the Bundesbank to address Spain and Italy, and the Chinese appear well aware they need to stabilize their own economy.”

China ETF Advances

The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., rose for a third day, adding 0.6 percent to $35.19, while the Standard & Poor’s 500 Index (SPX) advanced 0.5 percent to 1,401.35 as companies including Chesapeake Energy Corp. (CHK:US) reported better-than-estimated earnings.

Merkel’s decision to endorse ECB bond-buying in conjunction with the European rescue fund came despite criticism that the plan is a “violation” of the central bank’s rules and that Greece ought to be “cut free” from the euro.

Rosenberg called for the Fed to focus on buying more mortgage-backed securities to boost growth and hiring. He warned that without new stimulus, the U.S. jobless rate would rise to 8.4 percent by year’s end. U.S. payrolls increased more than forecast in July as the unemployment rate rose to 8.3 percent, the Labor Department said on Aug. 3.

“The jobless figure sent a wave of optimism through the mindset of U.S. investors,” Mullaney said.

Earnings

Companies including Fossil Inc. (FOSL:US) in New York, along with Xstrata Plc (XTA) and Danske Bank A/S (DANSKE) in Europe reported earnings that beat estimates, lifting their respective markets. The Stoxx Europe 600 Index (SXXP) rose 0.7 percent to 268.80. The Shanghai Composite Index (SHCOMP) added 0.1 percent yesterday to 2,157.62 while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong gained 0.4 percent to 9,851.75, the highest level in two months.

Thirteen companies in the Bloomberg China-US gauge that have reported earnings since the mid-July have beaten estimates by 12 percent on average, according to data compiled by Bloomberg.

“The earnings numbers we’re seeing gives us confidence that although China is slowing, we’re not going to have a hard landing,” said Audrey Kaplan, who helps manage $2 billion as head of international equities at Federated Global Investment Management in New York. “The growth is moderate but without inflation, which is really quite good conditions for long-term investors looking to buy stocks at low valuations.”

Qihoo Jumps

Qihoo, the maker of China’s most-used Web browser, climbed 9.4 percent to $16.97, the biggest gain since April 19 after saying it will report second-quarter earnings in two weeks. Qihoo was accused by Anonymous Analytics of exaggerating its user traffic. The company’s Chief Financial Officer Alex Xu last month denied the allegations.

“This stock has been under pressure because of concerns about the company’s accounting,” Henry Guo, an analyst at ThinkEquity Partners LLC who recommends buying shares of Qihoo, said in a telephone interview from San Francisco yesterday. “The announcement of an earnings date is a good sign.”

American depositary receipts of Aluminum Corp., the largest maker of the lightweight metal in China also known as Chalco, rose 5.7 percent to $11.01, the highest since June 20. Commodities including aluminum and crude rose.

Mindray surged 12 percent to $34.96, a three-month high. The stock has gained 37 percent this year. Mindray said its 2012 adjusted net income would increase “at least” 15 percent over last year, up from its previous estimate of 13 percent.

Melco Gains

Melco Crown Entertainment Ltd. (MPEL:US), a venture between billionaire James Packer and a son of gambling tycoon Stanley Ho, rose 1.7 percent to $10.73, a one-month high, as net income rose (MPEL:US) 23 percent to $82.3 million. Sales fell to $938.5 million, less than a $983.8 million average estimate, according to eight analysts surveyed (MPEL:US) by Bloomberg.

“The expectations given what happened Las Vegas Sands and Wynn were so low that just the fact that Melco didn’t miss by that much was a plus,” said John Kempf, an analyst at RBC Capital Markets in New York who has an outperform rating on the stock with a 12-month price target of $14.

Las Vegas Sands Corp. (LVS:US), the casino company controlled by billionaire Sheldon Adelson, said on July 25 that second-quarter profit (LVS:US) fell 34 percent. Wynn Macau Ltd. (1128), the Hong Kong-listed unit of billionaire Steve Wynn’s Las Vegas company, reported a 7.1 percent drop in second-quarter revenue on July 18.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • ACH
    (Aluminum Corp of China Ltd)
    • $11.0 USD
    • 0.05
    • 0.45%
  • MR
    (Mindray Medical International Ltd)
    • $31.0 USD
    • -0.12
    • -0.39%
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