Chinese equities climbed for a fifth day in New York, the longest stretch of gains since October, as signs Asia’s biggest economy is rebounding overshadowed disappointing new loans data.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. added 0.5 percent to a five-week high of 94.89 yesterday. Sina Corp. (SINA:US) jumped the most in three weeks and AutoNavi Holdings Ltd. (AMAP:US) extended a two-day rally as the companies said they were teaming up to allow customers to share their services. Video website owner Youku Tudou Inc. surged the most in three months while web travel agency Ctrip.com International Ltd. (CTRP:US) rose for a fifth day.
November industrial output and retail sales data released Dec. 10 exceeded economists predictions, bolstering the outlook for an economy that may grow 8 percent in 2013, the official People’s Daily reported yesterday, citing Zhu Baoliang, chief economist at the State Information Center. The government, which gets new leaders in March, set a 7.5 percent expansion target for 2012. The Shanghai Composite Index slipped 0.4 percent yesterday as central bank data showed the amount of new loans issued in November trailed the median analyst forecast.
“There’s plenty of evidence pointing to China’s economy bottoming in the third quarter, and the official growth target this year will be met,” Audrey Kaplan, the lead manager of the $532 million Federated InterContinental Fund at Federated Global Investment Management, said by phone from New York yesterday. “We’ve raised our weighting on Chinese equities after China’s leadership transition as we have a high conviction of its growth potential going into next year.”
The iShares FTSE China 25 Index Fund (FXI:US), the biggest Chinese exchange-traded fund in the U.S., rose for a sixth day, gaining 0.1 percent to $38.80. The Standard & Poor’s 500 Index rose 0.7 percent to 1,427.84 after German investor confidence climbed and on prospects there is progress in federal budget talks in Washington.
The Hang Seng China Enterprises Index (HSCEI) was little changed at 10,991.86 yesterday, while the Shanghai Composite gauge of domestic shares fell to 2,074.70, dropping for the first time in three days.
“The outlook continues to be quite positive for Chinese equities,” Allan Conway, who oversees about $24 billion as the head of emerging-market stocks at Schroders Plc (SDR) in London, said by phone yesterday. “Given the underlying economic strength and current valuation of the Chinese stock market, there’s a reasonable chance that you’ll see either performance in line or better than emerging markets generally.”
The MSCI Emerging Markets Index has gained 12.9 percent this year, compared with the 16 percent increase in the MSCI gauge for Hong Kong-traded Chinese equities.
Sina, owner of China’s Twitter-like Weibo service, jumped 4.4 percent to $43.17 in the biggest rally since Nov. 19. AutoNavi, a provider of Chinese map content to companies including Apple Inc. and to Sina, gained 4.5 percent to $11.35, extending yesterday’s 10 percent rally.
Shanghai-based Sina, which reported more than 400 million registered users of its Weibo service as of September, and Beijing-based AutoNavi entered a partnership to give their customers access to both Weibo and mapping services, according to the companies’ joint statement yesterday.
The firms expect “such content and product integration will enhance the social networking and navigational aspects of each other’s mobile offerings,” according to the statement.
China may have eased censorship of Sina’s Weibo service, with users able to search names of some Chinese leaders on Dec. 10 that were previously blocked, and to post criticism, the Telegraph newspaper reported, citing search results on Sina’s Weibo.
Youku Tudou, which operates China’s most-popular video websites, surged 5.6 percent to $15.50 yesterday in New York, the steepest rally since Sept. 14.
Spreadtrum Communications Inc. (SPRD:US), a mobile-phone chipmaker, climbed 5.6 percent to $15.80, the biggest jump in three months. The Shanghai-based company said on Dec. 10 that the world’s largest smartphone vendor, which it didn’t name, started shipping phones with Spreadtrum’s SC8810 chip.
Spreadtrum’s chips are in low-cost smartphones for Samsung Electronics Co., “a huge design win” for the Chinese company, Jay Srivatsa, the managing director of equity research at Chardan Capital Markets LLC, who has a buy recommendation on the shares, said by phone in New York on Dec. 10.
Ctrip.com surged 5.3 percent to $19.41, the biggest gain in two weeks. The company’s American depositary receipts have rallied for five days in a row, trimming their loss this year to 17 percent.
“While shares underperformed in 2012 due to increasing competition and the resulting lower operating margins, we believe stabilizing margins, solid revenue growth, a moderation in the promotional environment, and share buybacks should serve as a catalyst for shares,” Aaron Kessler, an analyst at Raymond James & Associates Inc., wrote in a Dec. 10 note.
NQ Mobile Inc. (NQ:US), a mobile security software developer, rebounded 3.5 percent to $5.65 after tumbling 11 percent on Dec. 10, the biggest drop since May. The shares plunged after FJE Research, a contributor to the website Seeking Alpha, said NQ Mobile’s user base has been “inflated more than tenfold, while the reality has deteriorated badly in recent months.” The article noted that its author was shorting the stock.
Beijing-based NQ rejected as false the article’s allegations in a statement yesterday, saying it “contains numerous inaccuracies and misleading speculations based on flawed arguments.”
Trina Solar Ltd. (TSL:US), China’s third-largest maker of solar panels, jumped 9 percent to a one-month high of $3.41. Yingli Green Energy Holdings Co. (YGE:US), the fourth-biggest, climbed 3.4 percent to $1.81.
China may raise the expansion target of solar power generation to as much as 40 gigawatts for the five-year period from 2011 to 2015, from 21 gigawatts, Shanghai Securities News reported yesterday, citing unidentified people in the industry.
Thirty-day volatility in the Bloomberg China-US gauge retreated to 19.19 yesterday from 19.88 a day earlier. The Bloomberg Chinese Reverse Mergers Index (CHINARTO), which tracks a basket of companies that gained U.S. listings after buying firms that already trade, climbed 0.3 percent to a one-week high of 74.06.
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