Chinese stocks traded in New York posted the biggest weekly increase in 2012 on speculation policy makers will take further measures to stimulate the economy after inflation fell to a two-year low and export growth slowed.
The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. climbed 5.2 percent to 91.93 last week, the steepest gain since the five days ended Dec. 2. 51job Inc. (JOBS:US), an online recruiting services provider, and China Lodging Group Ltd. (HTHT:US) surged more than 20 percent on better-than-estimated profits. Sina Corp., a social-media company, completed the biggest climb since March.
Government data showed last week that exports grew 1 percent after climbing 11.3 percent in June, missing the 8 percent median estimate of 32 analysts surveyed by Bloomberg. Consumer prices rose 1.8 percent last month, the slowest pace since January 2010. Policy makers cut interest rates in June and July after two reductions in banks’ reserve-requirement ratios this year as the economy expanded at the slowest pace since 2009. China also stepped up approval of investment projects.
“The worse China’s economic data is, the more likely the equity market is going to perform well just because it will add more and more of a case for stimulus,” Dave Lutz, head of exchange-traded fund trading at Stifel Nicolaus & Co., said in a phone interview on Aug. 10 from Baltimore. “A lot of people are anticipating aggressive stimulus policy out of China.”
China ETF Advances
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese ETF in the U.S., added 1.2 percent to $35.23 in the five days to Aug. 10, completing its third week of gains. The Standard & Poor’s 500 Index (CH55BN) of the biggest U.S. shares increased 1.1 percent to 1,405.87, up for a fifth week.
51job, based in Shanghai, surged 20 percent to $43.84 on Aug. 10 in New York, completing a weekly rally of 26 percent.
The online recruiter said on Aug. 9 that second-quarter adjusted net income was 66 cents per American depositary share and reported sales $56.7 million in sales, beating the company’s previous guidance. The company forecast third-quarter profit of as much as 66 cents per share, beating the 64 cents estimate by William Blair & Co.
“Expectations about the second quarter were so low that investors were pleased that the company’s reassuring outlook suggests their market is stable and hasn’t deteriorated,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million and holds shares in 51job, said by phone from Lisle, Illinois on Aug. 10. “51job’s competitive position continues to improve as they’re probably gaining some market share in the downturn.”
China Lodging Forecast
Shanghai-based China Lodging raised its estimate for 2012 sales growth to as much as 41 percent in an Aug. 9 statement, from the previous 37.5 percent. Adjusted net income for the second quarter jumped 69 percent from a year earlier to 75 million yuan ($11.8 million).
Home Inns & Hotels Management Inc. (HMIN:US), which runs the biggest economy hotel chain in China, advanced 11 percent in the last five days to $22.13, its third weekly gain. 7 Days Group Holdings Ltd. (SVN:US), the second largest, retreated 3.9 percent during the week to $9.62 after surging 21 percent in the previous period.
Home Inns’ net income of $5.7 million for the second quarter compared with the $12.4 million average estimate of five analysts surveyed by Bloomberg. 7 Days’ $8.7 million profit for the three months trailed the $10 million mean estimate of six analysts surveyed by Bloomberg.
“There’s clearly no rebound noted,” Ella Ji, a hotel chains analyst at Oppenheimer & Co., said in an e-mailed report on Aug. 10.
Separate government reports showed last week China’s industrial output growth unexpectedly slowed in July to 9.2 percent from a year earlier and retail sales rose 13.1 percent, trailing analysts’ forecasts. Barclays Plc cut its estimate for third-quarter growth to 7.7 percent from 8.2 percent last week while Deutsche Bank AG lowered its forecast to 7.5 percent from 7.9 percent.
Sina, which runs the Twitter-like Weibo service in China, rose 17 percent in the past five days to $52.04, the largest weekly gain in five months.
The Shanghai-based company, due to report (SINA:US) second-quarter results on Aug. 15, may report a second-quarter loss of $3.9 million, compared with a profit of $10 million a year earlier, according to the average estimate of 11 analysts in a Bloomberg survey.
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