Chinese stocks retreated from a one- week high in New York as foreign investment data stoked concern over the economy and Trina Solar Ltd. (TSL:US) sank to a record low after posting its fifth consecutive quarterly loss.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. slid 1.1 percent to 90.60 yesterday, after climbing 2.7 percent over the previous two days. Trina, China’s third-largest producer of solar panels, led declines on the gauge, while Cnooc Ltd. (883) traded at a discount (CEO:US) to Hong Kong for the first time in three days as oil declined. Qihoo 360 Technology Co. (QIHU:US), owner of China’s most popular Web browser, rose to a two-month high after posting better-than-estimated quarterly profit.
Trina joined 19 other companies in the China-US index, including Huaneng Power International Inc. (HNP:US) and Yanzhou Coal Mining Ltd. (YZC:US), in reporting third-quarter earnings that trailed analysts’ forecasts. Foreign direct investment in China fell 0.2 percent last month, data yesterday showed, highlighting risks to growth in the world’s second largest economy as a new generation of leaders prepare to take over power in March.
“The economy has bottomed, but it’s not picking up yet,” Elena Ogram, who manages $50 million of emerging-market assets, including Chinese stocks, at Bank am Bellevue AG in Zurich, said by phone yesterday. “When you look at earnings releases, they failed to provide positive surprises. Companies are waiting for policy direction and they are not budgeting for next year because of the political transition.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., slid 1 percent, the biggest drop in a week, to $36.19. The Standard & Poor’s 500 Index rose 0.1 percent to 1,387.82 as a report showing an unexpected increase in U.S. housing starts offset a tumble in Hewlett- Packard Co. shares.
Trina and Yingli Green Energy Holding Ltd. (YGE:US), the sixth- largest silicon-based solar module producer, led the decline in Chinese U.S.-listed shares after Trina reported its loss and cut its full-year shipment forecast for a second time.
Changzhou, China-based Trina plunged 8.8 percent to $2.19 in New York, while Yingli fell 5.8 percent to $1.3, the lowest levels on record. Both stocks have lost more than 65 percent this year.
Trina’s net loss widened to $57.5 million in the third quarter from $31.5 million a year ago and gross margins fell to 0.8 percent from 10.8 percent, the company said in a statement yesterday. Full-year shipments will be between 1.55 gigawatts and 1.6 gigawatts, compared with the range of 1.75 gigawatts to 1.8 gigawatts the company forecast in August.
Solar manufacturers are contending with a global glut that’s driving down prices and eating into profitability as governments from Europe to the U.S. reduce support for the industry. Panels prices have dropped about 20 percent in the past year, Bloomberg New Energy Finance data show.
The Bloomberg China-US measure has lost 3.5 percent this month, reversing a three-month rally triggered by optimism China’s economy may be rebounding from a slowdown over the past seven quarters. China’s FDI inflows in the first 10 months of the year declined 3.5 percent to $91.7 billion, the Commerce Ministry said yesterday.
Chinese leadership -- headed by Xi Jinping, who took the reins of the ruling Communist Party last week in a once-a-decade power handover -- is facing the slowest growth in a decade, according to economists, after expansion of more than 10 percent annually over the past 10 years. Gross domestic product may increase by 7.7 percent this year, the weakest pace since 1999, based on the median estimate of analysts surveyed by Bloomberg.
‘Bounce Along Bottom’
“We’re probably going to bounce along the bottom for a while, and markets are going to reflect that,” Derrick Irwin, who helps manage $2.5 billion at the Wells Fargo Advantage Emerging Markets Equity Fund, said in a phone interview yesterday from Boston. “We haven’t been increasing allocations meaningfully in China.”
The Shanghai Composite Index (SHCOMP) of domestic shares lost 0.4 percent to 2,008.92 yesterday, the lowest level since Sept. 26, while the Hang Seng China Enterprises Index slipped 0.6 percent to 10,227.24.
Qihoo rose 2.1 percent to $24.2 after it reported third- quarter adjusted earnings of 20 cents a share, beating an average forecast for 14 cents from six analysts surveyed by Bloomberg. The company, which started a search engine in August, expects (QIHU:US) revenue to be as much as $94 million this quarter, compared with the median analysts’ estimate of $90.3 million.
Analysts led by Tian X. Hou at T.H. Capital LLC. maintained their buy rating for Qihoo, saying the company may commercialize its search engine business as soon as December to further boost growth.
“While we do not expect significant revenue generation in fourth quarter of 2012 and first quarter of 2013, the potential could be significant,” the analysts wrote in a report.
Perfect World Co. (PWRD:US), an online games operator based in Beijing, jumped 4.3 percent, the most in three weeks, to $10.89 in the U.S. The company said third-quarter revenue increased to $110 million, exceeding the median analysts’ estimate of $104 million.
American depositary receipts of Cnooc, China’s largest offshore oil producer, lost 0.4 percent to $208.33. The ADRs traded at a 0.5 percent discount to the company’s Hong Kong stock, the first time in three days, data compiled by Bloomberg show. Crude oil tumbled 2.8 percent to $86.75 a barrel on the New York Mercantile Exchange on speculation a potential cease- fire between Hamas and Israel may ease tension in the Middle East.
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