Chinese equities rose in New York, driving the benchmark index to its biggest weekly gain since September, as expanding manufacturing adds to signs that growth in the world’s second-largest economy is recovering.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. added 2.3 percent to 93.62 for a 4.5 percent jump this week, the most since the second week of September. Online book seller E-Commerce China Dangdang Inc. (DANG:US) surged 7.4 percent to the highest level since Oct. 4, while Yanzhou Coal Mining Co. (YZC:US) climbed to a premium over its Hong Kong shares for a fourth trading day.
A preliminary reading of a purchasing managers’ index released on Nov. 22 indicated the first expansion in China’s manufacturing industry in 13 months, a sign the nation’s seven- quarter slowdown may have reached its zenith. Analysts have boosted earnings forecasts for Chinese U.S.-listed stocks this week, with the average estimated earnings-per-share at the highest in two months for the China-US gauge.
“All the numbers have confirmed that the economy has bottomed in the third quarter,” Michael Ding, the lead manager of the China Region Fund (USCOX:US) at U.S. Global Investors Inc., which oversees $2.2 billion, said by phone from San Antonio, Texas yesterday. “The stabilization will benefit corporate earnings. The market has finished the downward adjustment of earnings expectations.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., jumped 2.4 percent to $37.46 yesterday, the highest close since Nov. 6. The ETF gained 4.7 percent this week, the most since September.
The Standard & Poor’s 500 Index added 1.3 percent and had the biggest weekly increase in five months, after German business confidence unexpectedly climbed and the American holiday shopping season got under way. The Shanghai Composite Index (SHCOMP) gained 0.6 percent in the week, the first advance in three weeks.
Dangdang, the country’s biggest online bookseller, rose to $4.52 in New York in trading volume that was double the daily average over the past three months. NQ Mobile Inc. (NQ:US), an Internet service provider, jumped 9.9 percent to $6.20, the biggest increase since April.
Focus Media Holding Ltd. (FMCN:US), an advertising company, climbed 0.9 percent to $24.52. China Development Bank, Industrial & Commercial Bank of China and China Minsheng Banking Corp. are joining lenders including Bank of America Corp. and Deutsche in providing finance for a consortium to buy the Chinese company, according to two people familiar with the matter. The persons asked not to be identified because the details are private.
A consortium of bidders including Carlyle Group LP (CG:US) and Chief Executive Officer Jason Nanchun Jiang, proposed to buy Focus Media at $27 a share in August.
American depositary receipts of Yanzhou surged 5 percent, the most since Sept. 14, to $15.52. The ADRs traded 0.9 percent higher than their equivalent shares in Hong Kong.
The improving manufacturing data comes after reports showed growth in industrial output and retail sales picked up in October. Analysts expect earnings of companies in the Bloomberg China index will increase to $7.28 per share over the next 12 months, from an estimated $5.81 this year, according to data compiled by Bloomberg. At the end of October, they were forecasting earnings to be $6.89 per share.
China’s gross domestic product is poised to expand 7.7 percent this year, the weakest pace since 1999, based on the median estimate of analysts surveyed by Bloomberg this month. Growth may rebound to 8.1 percent in 2013, according to the median of 46 forecasts.
Vice Premier Li Keqiang, promoted last week to the No. 2 spot in the ruling Communist Party and set to take the job of premier in March, said this week that three decades of opening up the economy must be accelerated.
Li, speaking Nov. 21 at a meeting in Beijing, said China needed open up state-owned enterprises and the taxation system, according to remarks published on the government’s website.
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