Baidu Inc. (BIDU:US), owner of China’s most- used search-engine, tumbled the most in 10 months in New York on speculation mounting competition from Qihoo 360 Technology Co. (QIHU:US) will erode revenue.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. lost 1 percent, the most in three weeks, to 89.75 yesterday. Baidu sank 5.7 percent, the steepest drop since September, in its second day of declines. Qihoo, the developer of China’s most-used Web browser, jumped to a three- month high as analysts project the company’s outlook will beat estimates. Oil company Cnooc Ltd. (883) fell the most in a month after first-half profit dropped.
Qihoo, which develops a web browser and security software, started a new search engine last week, entering a market that is 80 percent dominated by Baidu. Qihoo’s forecast will probably beat the $77.8 million average third-quarter sales estimate of eight analysts surveyed by Bloomberg as the Internet company boosts advertising sales, Maxim Group LLC said.
“Investors realize that over time Baidu’s bottom line could be significantly negatively affected by competition from Qihoo,” Kevin Pollack, a managing director at Paragon Capital in New York, said by phone yesterday. Qihoo’s search engine “may soon cut into Baidu’s market share.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., dropped 0.5 percent to 34.29, extending its retreat to a fifth day. The Standard & Poor’s 500 Index of the biggest U.S. shares lost 0.3 percent to 1,413.17 as a slump in technology companies overshadowed optimism euro-area leaders will make progress in resolving the region’s debt crisis.
American depositary receipts of the Beijing-based Baidu sank to $123.4, the biggest decline since Sept. 29.
Sina Corp.’s Weibo social media platform showed 14.2 percent of the 1,332 voters would choose Qihoo’s search engine, the second among the five most popular Chinese search engines, Stifel Nicolaus & Co. said in an Aug. 20 report, citing a survey. Baidu got 76.5 percent of the votes. Search engines by Google Inc. and Sohu.com Inc. ranked behind Qihoo.
“Qihoo search is pretty good, without commercials now,” Tian X. Hou, founder of T.H. Capital LLC in Beijing, said by e- mail yesterday. “The search’s relevance and inclusion rates are similar to those of Baidu and Google, if not better.”
Competition in Video
Youku Inc. (YOKU:US) and Tudou Holdings Ltd. (TUDO:US), the most-popular video websites in China, won shareholder approval on Aug. 19 for their merger. The combined company will compete with Baidu’s iQiyi video unit and a similar operation of Tencent Holdings Ltd. (700), China’s largest Internet company by market value.
“Despite its market dominance, Baidu is going to have greater competition in both the search engine from Qihoo and video areas from Youku after its acquisition of Tudou,” Paragon Capital’s Pollack said.
Qihoo’s ADRs gained 4.4 percent to $21.1, the highest level since May 22. Youku slid 2.7 percent to $17.6 while Tudou declined 2.5 percent to $28.04.
ADRs of Cnooc, China’s biggest offshore oil and gas explorer, sank 3.2 percent to $194.5 yesterday, slumping the most since July 23. The ADRs, each representing 100 underlying shares, traded 0.1 percent below (CEO:US) its Hong Kong stock, from a premium of 0.2 percent the previous day.
New Home Prices
Net income at the offshore oil company declined 19 percent in the first half to 31.87 billion yuan ($5 billion), or 0.71 yuan a share, from 39.34 billion yuan, or 0.88 yuan, a year earlier, Cnooc said in a statement yesterday. That compared with the 35.07 billion yuan median estimate of seven analysts in a Bloomberg survey.
Beijing-based SouFun Holdings Ltd. (SFUN:US), the largest real estate information website in China, plunged 6.3 percent to $13.9, the biggest tumble this month. E-House China Holdings Ltd. slumped for a fourth day, losing 2.7 percent to $5.09, the lowest level since Aug. 3.
China’s new home prices climbed in July from a month earlier in 49 of the 70 cities tracked by the Chinese government, the most since May last year, government data released Aug. 18 showed. The government may expand a property tax trial and raise the “threshold” for home pre-sales if housing prices rebound too fast, Shanghai Securities News reported Aug. 20, citing unidentified people.
Elong Inc. (LONG:US), China’s second-largest online travel agency whose biggest shareholder is Expedia Inc., surged 11 percent to $15.95, the steepest rally since November.
The company forecast third-quarter sales will rise as much as 20 percent from a year ago, according to a statement dated Aug. 20.
Trina Solar Ltd. (TSL:US), the world’s fourth-largest solar-panel maker, jumped 7 percent to a three-week high of $5.18.
Trina, based in Changzhou of China’s Jiangsu province, said yesterday it seeks to spur demand for its products by developing power plants that will use them, a strategy implemented by competitors including First Solar Inc., the largest U.S. solar company.
Trina reported a second-quarter net loss of $92.1 million, or $1.30 an ADR, from net income of $11.8 million, or 17 cents, a year earlier, in a statement yesterday. Analysts had expected a loss of $1.03 per ADR, the average of seven estimates compiled by Bloomberg. Second-quarter sales fell 40 percent to $346.1 million from a year earlier.
The Shanghai Composite Index (SHCOMP) advanced 0.5 percent to 2,118.27 yesterday. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies increased 0.3 percent to 9,825.95.
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