Chinese equities rose last week in New York, pushing the benchmark index to a one-month high, as improving U.S. economic data bolsters the outlook for China’s second-biggest export market.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. climbed 1.3 percent to 93.98, the highest level since Nov. 6. SouFun Holdings Ltd. (SFUN:US), China’s biggest real estate website owner, led weekly gains as new home prices in the nation rose for a six month. Huaneng Power International Inc. (HNP:US) soared to an almost five-year high as coal prices fell. AutoNavi Holdings Ltd. (AMAP:US)’s weekly slump was the worst on record after Apple Inc. declined.
Ten-day volatility on the China-US gauge sank to the lowest in a month Dec. 7, as the U.S. Labor Department said payrolls rose more than economists expected in November and the jobless rate in the world’s largest economy sank to the lowest in almost four years. The U.S. is the second-biggest consumer of Chinese exports after Europe, accounting for 17 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
“It’s a sudden renewed bet on a pickup on exports,” Michael Gayed, a manager of the ATAC Inflation Rotation Fund, said by phone in New York on Dec. 7. “Any kind of recovery in Europe or the U.S. benefits China. Now there’s some comfort with taking more risk in those areas that would benefit in a period of growth.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., rallied 3.4 percent last week to $38.41, the highest level in almost nine months. The Standard & Poor’s 500 Index advanced 0.1 percent to 1,418.07.
“You have a global economy that, at least in the U.S., no longer appears to be getting worse, and as a major export destination for China that helps,” Jim Oberweis, who oversees $700 million as president of Oberweis Asset Management Inc. in Lisle, Illinois, said by phone Dec. 7. “From a macro standpoint, it appears that the worst is probably behind us.”
SouFun, climbed 8.5 percent to $23.39 in a third straight week of gains. Chinese new home prices rose in November from October, a sixth month of advances, Beijing-based SouFun said in an e-mailed statement on Dec. 3, based on its survey of 100 cities.
Beijing-based electricity producer Huaneng Power jumped 8.2 percent to $36.89 in the week, the highest close since January 2008. China’s benchmark price for thermal coal fell for a second week to the lowest level since the end of September as inventories at the port of Qinhuangdao increased, industry data released last week showed.
AutoNavi, a Chaoyang, China-based company that provides map content to Apple, tumbled 19 percent to $9.87. Apple slumped 8.9 percent last week, the most since May 2010, after China Mobile Ltd. (CHL:US) Chief Executive Officer Li Yue said he wouldn’t add the iPhone to the world’s largest wireless network without a deal that’s favorable for his company.
Trina Solar Ltd. (TSL:US) and LDK Solar Co. (LDK:US) rallied in New York on Dec. 7 after solar manufacturer JinkoSolar Holding Co. (JKS:US) said its Swiss unit would get as much as $1 billion in Chinese state aid. JinkoSolar’s agreement with China Development Bank Corp. is part of the government’s effort to provide support for selected manufacturers it thinks are most likely to survive, the company’s Chairman Li Xiande said to reporters in Zug, Switzerland last week.
Jiangxi, China-based JinkoSolar jumped 14 percent to $4.68 in New York, capping a 10 percent gain last week. Xinyu-based LDK, the world’s second biggest maker of wafers for solar panels, climbed 11 percent to $1, trimming a 15 percent weekly decline, while Trina, China’s third-largest maker of solar panels, based in Changzhou, added 10 percent to $3.10, completing an 8 percent advance in the week.
Focus Media Holding Ltd. (FMCN:US), the advertising company subject to a $3.5 billion buyout offer, sank 2.6 percent to $24.12 on Dec. 7 after after Dow Jones Newswires reported CDH Investments Fund Management Co. is withdrawing from the group bid to take the company private.
CDH was to invest about $200 million in the buyout and dropped out because it felt returns on the investment weren’t sufficient, Dow Jones Newswires reported, citing a person it didn’t identify with knowledge of the deal.
CDH and Jing Lu, responsible for Focus Media’s investor and media relations, didn’t reply to e-mails sent after business hours in Beijing on Dec. 7. The buyer consortium includes Washington-based Carlyle Group LP (CG:US), whose spokesman Chris Ullman declined to comment on the report.
“The market was already kind-of skeptical on this take- private” deal, Sachin Shah, a special-situations and merger- arbitrage strategist at Tullet Prebon Plc, said by phone from Jersey City, New Jersey on Dec. 7. “With that backdrop, you basically have one of the investors saying, ‘we don’t think it may be attractive.’ Not only has it scared investors, this is what the shorts and skeptics are looking for.”
Shanghai-based Focus Media has been targeted by short seller Muddy Waters LLC, which said last November that the company exaggerated its advertising network. Focus said the allegations lacked merit.
Youku Tudou Inc. (YOKU:US), China’s biggest online video company, plunged 7 percent to a record-low $13.94 on Dec. 7. The shares sank 18 percent last week.
Youku Tudou’s mobile application was dropped from the Apple Inc. app Store, according to a Dec. 5 report on TechWeb.com, and the company may not realize the gains in market share that it anticipated when Youku and Tudou Holdings Ltd. merged in March, Echo He, an analyst at Maxim Group LLC who rates the stock hold, said by phone in New York.
New Oriental Education & Technology Group Inc. (EDU:US), a Beijing- based education services provider, fell 13 percent to $17.56 last week, the biggest slump since July.
The Securities and Exchange Commission accused the Chinese units of the Big Four accounting firms last week of blocking fraud investigations into nine China-based companies by withholding documents.
New Oriental tumbled 11 percent on Dec. 4 as Wells Fargo & Co. said in a note that concern that the disagreement between the U.S. and China over auditor oversight will spur delistings may weigh on the company’s valuation. The bank later clarified the note to state they weren’t implying New Oriental was under investigation by the U.S. regulator.
The company isn’t one of the nine being probed by the SEC, New Oriental’s President Louis Hsieh said in a Dec. 5 interview. SEC spokesman John Nestor declined to state which companies are being investigated when contacted by phone on Dec. 6.
The Wells Fargo note, by analyst Trace Urdan, also referred to Ambow Education Holding Ltd. (AMBO:US), which slipped 1.8 percent last week to $2.80.
Melco Crown Entertainment Ltd. (MPEL:US) climbed 2.2 percent to $15.12 on Dec. 7 after the Macau casino operator announced it was buying a 93.1 percent stake in Laguna, Philippines-based Manchester International Holdings Unlimited Corp. (MIH) The stock was down 0.9 percent last week and traded at a 2.2 percent premium (MPEL:US) to its Hong Kong shares.
The Hang Seng China Enterprises Index (HSCEI) added 0.5 percent to 10,919.24 on Dec. 7, capping a 2.8 percent advance in the week, while the Shanghai Composite Index (SHCOMP) of domestic shares gained 1.6 percent to 2,061.79, the highest level since Nov. 12. The measure rose 4.1 percent last week, the most since October 2011.
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