Bloomberg News

Yanzhou Slumps as Japan Land Dispute Sinks ADRs: China Overnight

September 18, 2012

Chinese stocks fell for a second day in New York on concern a land dispute with Japan may curb foreign trade at a time the economy is growing at the slowest pace in three years.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York sank 0.9 percent to 91.53 yesterday for a two-day retreat of 2.5 percent, the biggest in eight weeks. Yanzhou Coal (YZC:US) Mining Co. slid and Aluminum Corp. of China dropped the most in three weeks. China Telecom Corp. (CHA:US) lost the most in three months while China Unicom (Hong Kong) Ltd. slumped as the companies cut the price for Apple Inc.’s iPhone 4S before the smartphone’s new version is sold in the country.

Japanese retailers closed stores in China as a territorial dispute has prompted thousands to protest in Chinese cities. Asia’s biggest economy needs more subways, highways and sewage plants, and construction of that infrastructure will help the economy, Xu Lin, a senior official at the National Development and Reform Commission, said yesterday in Beijing. Gross domestic product expanded 7.6 percent in the second quarter, the least since 2009.

“The conflict with Japan doesn’t give investors enthusiasm,” Elena Ogram, a portfolio manager at Bank am Bellevue AG, which manages about $50 million of emerging-market equity assets, said by phone yesterday from Zurich. “The infrastructure spending plan may not be large enough to have any real impact on the economy. The real issue here is Chinese fundamentals, which are simply not very strong.”

ETF Put Options

Thirty-five of 70 cities tracked by China’s statistics bureau reported prices gains in August, from 49 in July, according to data released yesterday in Beijing.

The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., retreated 0.6 percent in its second day of declines to $34.52.

Investors started to buy contracts protecting them from future declines in the ETF on “geopolitical concerns and weak” home prices data, Frederic Ruffy, a senior options strategist at WhatsTrading.com, wrote in a note to clients yesterday. Put options (FXI:US) show investors are betting the ETF may drop as much as 11.7 percent within the next 31 days, he said.

American depositary receipts of China Telecom, the smallest among the nation’s three wireless carriers, declined 4.1 percent to $59.16, the most since June 21. The company in March became the second iPhone service provider in the nation after China Unicom.

iPhone Prices

China Telecom will cut iPhone 4S prices by 2,000 yuan ($316.5) starting today, the Shanghai Daily reported yesterday, citing prices on the company’s website.

China Unicom reduced its sale prices of the iPhone 4S by 500 to 700 yuan on Sept. 14 after Apple released the new iPhone 5 model. Unicom is expected to start selling the iPhone 5 within three months, Caixin magazine reported Sept. 13.

The ADRs of China Unicom dropped 1.5 percent to $16.74 in its second day of declines. The ADRs traded 1.1 percent above (CHU:US) its Hong Kong shares, after posting discounts in previous two days.

Yanzhou Coal, the fourth-largest producer of the fuel in China, sank 4 percent to $15.31, the steepest retreat since Sept. 5.

Aluminum Corp. of China, the nation’s biggest producer of the light metal, lost 3.3 percent to $10.35, extending a two-day slump to 6.4 percent, the most since June 1.

Youku Tudou Rallies

Youku Tudou Inc. (YOKU:US), a Beijing-based video website operator that completed a merger last month, rebounded 3 percent yesterday to $19.32, after plunging 10 percent a day earlier.

“The sell-off yesterday was aggressive and overdone,” Tian Hou, analyst at TH Capital LLC, an independent research firm, said in a phone interview in New York. “Youku is in a better position because of the merger and as more consolidation takes place, they can increase their market share.”

The Standard & Poor’s 500 Index (SPX) dipped 0.1 percent to 1,459.32 yesterday as concern grew that Europe’s leaders will struggle to resolve their debt crisis.

The Shanghai Composite Index (SHCOMP) slid 0.9 percent to 2,059.54 yesterday for a two-day decline of 3 percent, the biggest since March. The Hang Seng China Enterprises Index of Chinese companies lost 1 percent to 9,683.89.

To contact the reporters on this story: Belinda Cao in New York at lcao4@bloomberg.net; 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

  • YZC
    (Yanzhou Coal Mining Co Ltd)
    • $8.21 USD
    • -0.19
    • -2.31%
  • CHA
    (China Telecom Corp Ltd)
    • $61.52 USD
    • -0.52
    • -0.85%
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