Bloomberg News

E-House Leads ADR Retreat on PBOC Policy Bets: China Overnight

August 20, 2012

E-House Leads ADR Retreat on PBOC Policy Bets

Yancoal Australia Ltd., which is controlled by Yanzhou Coal, will review expansion plans at its seven mines to “ensure that the appropriate capital expenditure discipline is maintained,” the Sydney-based Yancoal said yesterday in a presentation sent to Australia’s stock exchange. Source: Gloucester Coal Ltd. via Bloomberg

Chinese equities (CH55BN:US) fell in New York and E-House China Holdings Ltd. dropped the most in a week after an increase in home prices in July spurred concern the central bank will avoid easing monetary policy.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. declined 0.6 percent to 90.63 yesterday, a two-week low. E-House, a provider of property agency services, slid for a third day. Yanzhou Coal Mining Co. retreated 2.3 percent after its Australian unit said it’s reviewing expansion plans. Qihoo 360 Technology Co. surged to the highest level since May as the maker of China’s most-used Web browser is set to report second-quarter earnings today.

July home prices climbed from a month earlier in 49 of the 70 cities tracked by the Chinese government, the statistics bureau said on its website on Aug. 18. That was the most since May last year and compared with 25 cities in June. The latest report adds to evidence the housing market is picking up after the People’s Bank of China cut interest rates for the first time in three years on June 7 and announced a second reduction less than a month later, Henderson Global Investors said.

Rising home prices may “mean Chinese authorities will keep tight control on the property sector,” Charlie Awdry, a portfolio manager at Henderson’s $800 million China Opportunities Fund, said by phone from London yesterday. “The government’s actions would be more on the fiscal side, subsidy side or consumer-related side.”

Housing Prices

The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., dipped 0.1 percent to 34.46 in its fourth day of declines. The Standard & Poor’s 500 Index of the biggest U.S. shares was little changed at 1,418.13.

China may expand a property tax trial and raise the “threshold” for home pre-sales if housing prices rebound too fast, Shanghai Securities News reported yesterday, citing unidentified people.

E-House (EJ:US) slid 4.7 percent to $5.23, the lowest level since Aug. 7. The Shanghai-based company said on Aug. 16 second- quarter sales rose 25 percent from a year earlier to $114.1 million, more than the $99.4 million average estimate of four analysts compiled by Bloomberg. Net loss for the quarter was $7.8 million, compared with a loss of $10.3 million forecast by analysts.

Signs of warming up in China’s property market in the second quarter was “partly driven by a better credit environment,” Xin Zhou, E-House’s chief executive officer said in the Aug. 16 statement. “The government’s overall cooling measures for the Chinese real estate market will remain in place for the near future.”

Yancoal Plans

Yanzhou Coal’s American depositary receipts fell to $15.47, the lowest level since Aug. 2. The ADRs, each representing 10 underlying shares, traded 0.3 percent below its Hong Kong stock, a second day of discounts.

Yancoal Australia Ltd., which is controlled by Yanzhou Coal, will review expansion plans at its seven mines to “ensure that the appropriate capital expenditure discipline is maintained,” the Sydney-based Yancoal said yesterday in a presentation sent to Australia’s stock exchange.

China’s benchmark thermal-coal price at Qinhuangdao port was unchanged for a third week, at a range of 620 yuan ($97) to 635 yuan a metric ton as of yesterday from a week earlier, data from the China Coal Transport and Distribution Association showed. The midpoint of the price range fell to the lowest level since October 2009 during the week ended July 29.

Qihoo’s Browser

Qihoo 360, also a computer security software developer, jumped 9 percent to $20.21, the highest level since May 30.

The Beijing-based company started an online search engine last week for public testing, co-Chief Financial Officer Alex Xu said in a phone interview on Aug. 15, adding the product may eventually generate advertising sales.

“Some postings on discussion forums over the weekend have stated that Qihoo’s new search engine has diverted more traffic to some company websites than Sohu’s search engine,” Henry Guo, an analyst at ThinkEquity Partners LLC said by phone from San Francisco yesterday. “This helped dispel earlier concerns that Qihoo may not have the technical ability to develop a search engine successfully. I also expect its second-quarter sales to reach the top end of its guidance.” Inc. owns China’s third-biggest online search engine while Baidu Inc. has the biggest.

Qihoo forecast on May 22 that second-quarter sales would jump as much as 108 percent to $73 million. It is scheduled to report the results today after U.S. markets close.

‘Strong Positive’

Qihoo’s third-quarter sales guidance may exceed analysts’ average estimates, mainly driven by its games and advertising business, Tian X. Hou, the founder of T.H. Capital LLC in China, said in a research note yesterday.

“QIHU can easily convert its browser users into search engine users. The expansion into the search area could be a strong positive for the company’s growth in the foreseeable future,” Hou wrote.

Sohu lost 1.7 percent, the biggest slump in a week, to $39.92 while Baidu retreated 2.3 percent to $130.91, snapping a two-day rally.

Youku Inc. (YOKU:US), the most popular online video website in China, sank 2.4 percent to $18.08. Tudou Holdings Ltd. (TUDO:US), the second largest video company, declined 1.8 percent to $28.76, halting a three-day gain.

Shareholders at both companies approved Youku’s acquisition of Tudou in separate meetings on Aug. 19, the companies said in statements yesterday.

The Shanghai Composite Index (SHCOMP) fell 0.4 percent to 2,106.96 yesterday, the lowest level since July 31. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies also dropped 0.4 percent to 9,794.86.

To contact the reporter on this story: Belinda Cao in New York at

To contact the editor responsible for this story: Tal Barak Harif at

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Companies Mentioned

  • CH55BN
    (Bloomberg China-US Equity Index)
    • $108.03 USD
    • 1.36
    • 1.26%
  • FXI
    (iShares China Large-Cap ETF)
    • $40.26 USD
    • -0.27
    • -0.67%
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