Chinese solar stocks led the first advance in the benchmark index of U.S.-traded shares this week on prospects domestic demand for alternative energy will rise after the government increased capacity targets.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. rallied 1.2 percent to 100.77 in New York, paring a 2.1 percent drop over the previous two days. Suntech Power Holdings Co. (STP:US), the world’s biggest solar-panel maker, surged 13 percent, while Trina Solar Ltd. (TSL:US), the nation’s third-biggest maker of solar panels, jumped to the highest level in five months. Semiconductor Manufacturing International Corp. (981) soared after JPMorgan Chase & Co. lifted its price target on the stock.
China, the world’s biggest supplier of solar power panels, plans to add 10 gigawatts of solar power capacity this year, more than double its current level, the National Energy Administration said in a statement on its website on Jan. 8. LDK Solar Co. (LDK:US) and Trina are the biggest gainers on the China-US gauge this year, after the government approved subsidies for rooftop solar installations Jan. 4, and initiated a second round of assistance to more than 100 solar developers last month.
“China is looking over the long term to move toward cleaner energy sources and to make their economic growth less energy dependent,” Charlie Awdry, a portfolio manager for Henderson Global Investors Ltd.’s 500 million pound ($801 million) China Opportunities Fund, said by phone yesterday from London. “The Chinese economy appears to be growing a little more robustly than it was in the middle of 2012 and that has caused some investors to feel more comfortable in China and put some money in.”
Henderson’s China fund has returned 4.8 percent over the past month, when it beat 89 percent of its peers, according to data compiled by Bloomberg. The fund’s 8.2 percent return over the past 12 months lagged behind 99 percent of its competitors, the data show.
The iShares FTSE China 25 Index Fund (FXI:US), the largest Chinese exchange-traded fund in the U.S., gained 1.1 percent to $41 in its first advance in three days. The Standard & Poor’s 500 Index (SPX) climbed 0.3 percent to 1,461.02 amid investor optimism over fourth-quarter U.S. corporate earnings.
The Shanghai Composite Index (SHCOMP) of domestic shares was little changed at 2,275.34 yesterday, while the Hang Seng China Enterprises Index (HSCEI) advanced 0.9 percent to 11,817.77, the biggest gain in a week.
Suntech, based in China’s Jiangsu province, rallied to $1.87, while Yingli Green Energy Holding Co. (YGE:US) jumped 7.4 percent to $3.05.
Trina, based in Changzhou, China, gained 12 percent to $5.81, the highest close since July 19. American depositary receipts of LDK, the second-largest manufacturer of wafers globally, based in Xinyu, China, climbed 7.3 percent to $2.21, the highest close since June 21.
China has approved a plan to provide subsidies to rooftop solar installations, China Daily reported Jan. 4, citing the Ministry of Housing and Urban-Rural Development. Subsidies will range from 7.5 yuan ($1.20) to 9 yuan per watt, according to the report. The nation will also make regional adjustments to the so-called feed-in tariffs, or above-market prices paid for electricity for renewable energy projects, according to a government statement on Dec. 19.
“It’s more healthy for China to shift subsidies toward the demand side from aids to suppliers,” Aaron Chew, a senior analyst at Maxim Group LLC, said by phone from New York yesterday. “But China’s capacity increase is still not enough to offset declines in other markets, and it may take two or three years for the market to recover and companies to make profits.”
Semiconductor Manufacturing surged 13 percent to $3.05, the highest price since September 2011. Its shares added 11 percent in Hong Kong yesterday to HK$0.49. JPMorgan raised its 12-month price target on the company’s stock to HK$0.53 from HK$0.45, maintaining an overweight rating, the equivalent of buy. Credit Suisse Group AG lifted its recommendation to outperform from neutral on Jan. 7.
The Shanghai-based company said its board is scheduled to approve fourth-quarter financial results on Feb. 6, according to a filing yesterday.
China Eastern Airlines Corp., the nation’s second-biggest carrier by market value, gained 3.7 percent to $21.5 in New York, the highest price since November 2011. Its ADRs traded 1.6 percent above shares traded in Hong Kong, the widest premium (CEA:US) since Nov. 23. Each ADR represents 50 underlying shares in the Shanghai-based carrier.
China Eastern will start daily flights from Shanghai to San Francisco on April 26, the Shanghai Daily reported yesterday, citing the company. The Chinese airline is also seeking talks to create deeper commercial relationships with Australia’s Qantas Airways Ltd., Australian Financial Review reported Jan. 7, citing an interview with China Eastern’s General Manager for Oceania Kathy Zhang.
Fifty-day volatility on the China-US gauge rose to 19.2 yesterday, the highest since Nov. 23, data compiled by Bloomberg show. Twelve-month non-deliverable forwards on the yuan strengthened 0.2 percent 6.2965 per dollar yesterday in New York, the highest level since March 9. The currency weakened less than 0.1 percent to 6.2262 in Shanghai.
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