Chinese stocks fell in New York on speculation gains that stoked the highest valuations in a month were overdone as consumer confidence declined in the U.S., the biggest buyer of the Asian nation’s goods this year.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York dropped 0.1 percent to 96.87 yesterday, as 31 companies sank while 22 climbed. Online search engine operator Baidu Inc. (BIDU:US) dropped, while smaller competitor Qihoo 360 Technology Co. (QIHU:US), whose valuation has doubled since August, slipped the most in two weeks. Trina Solar Co. (TSL:US) retreated from a two-month high, while Hollysys Automation Technologies Ltd. (HOLI:US) rallied the most in four weeks.
The average valuation of companies traded on the Bloomberg China-US measure was at 16.6 times estimated earnings yesterday after reaching a multiple of 16.8 on Dec. 19, the highest level in a month. Confidence among American consumers dropped more than forecast in December as the budget debate in Washington soured the outlook for the economy. Chinese exports to the U.S. rose 9.5 percent in the January-October period, the Beijing- based customs administration said on Nov. 9.
“If you think of the U.S. consumer as a big driver of China export demand, I don’t see that massively growing from here,” Derrick Irwin, who helps manage $2.5 billion at the Wells Fargo Advantage Emerging Markets Equity Fund, said by phone from Boston yesterday. “Until I see evidence of sustainable growth, it’s hard to be optimistic.”
The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., added 0.2 percent $39.54 yesterday, extending its gain this year to 13 percent. The Standard & Poor’s 500 Index retreated 0.1 percent to 1,418.10.
The Shanghai Composite Index of domestic shares dropped 0.6 percent to 2,205.9 from the highest level in more than five months. The measure has climbed 0.3 percent for the year. The Hang Seng China Enterprises Index advanced 0.7 percent to 11,348.5 for a 14 percent increase in the gauge.
Baidu, owner of China’s biggest search engine, slid 2 percent to $99.43, the steepest loss in three weeks. Shares of the Beijing-based company have rebounded 13 percent since Dec. 5, when they dropped to $88.12, the lowest level since September 2010.
Beijing-based Qihoo, which develops computer desktop applications including a search engine introduced in August, fell 1 percent to $26.8, the biggest decline since Dec. 11. Its American depositary receipts traded yesterday for 45 times estimated profit for this year, up from a multiple of 39 a month ago and 24 on Aug. 16 when its search service started.
“Some people may have thought the gains over the past month are too fast,” Echo He, a senior analyst at Maxim Group LLC who recommends buying Qihu’s stock and selling Baidu, said by phone from New York yesterday. “Trading volume is light around year-end, so the retreat shouldn’t be worrying.”
Renren Inc. (RENN:US), operator of a real-name social network, lost 3 percent to a one-week low of $3.29. The Beijing-based company said its board approved the renewal of the company’s share repurchase plan for another 12 months until the end of 2013, in a Dec. 26 statement.
NQ Mobile Inc., a mobile security software developer also based in Beijing, lost 3.7 percent to $6, the lowest since Dec. 17.
Trina Solar, China’s third-largest manufacturer, dropped from a two-month high, retreating 3.8 percent to $4.29. Trina’s slump, the most in a month, was the biggest among decliners on the Bloomberg China-US index.
Hollysys, an automation system manufacturer in Beijing, surged 5.1 percent to an eight-month high of $11.89. The company provided core equipment for the control system on China’s Beijing-Guangzhou high-speed train line, it said on its website Dec. 26. China started operation of the 2,298-kilometer high- speed railroad, the world’s longest, on Dec. 26.
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