Bloomberg News

SMIC Tumbles as Inflation Spurs Selloff: China Overnight

January 11, 2013

Chinese stocks traded in New York slumped, led by commodity producers and manufacturers, after data showed inflation in Asia’s biggest economy unexpectedly accelerated to a seven-month high.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. fell 1.1 percent to 101.34 in New York, posting a weekly drop of 0.4 percent. Chipmaker Semiconductor Manufacturing International Corp. (SMI:US) sank for the first time in four days, while Aluminum Corp. of China Ltd. (ACH:US) slid the most since October. Baidu Inc. (BIDU:US), China’s most-used search engine, soared to an 11-week high.

The China-US gauge followed the Shanghai Composite (SHCOMP) Index lower for the first weekly decline since November. Rising food prices stoked inflation last month to 2.5 percent from a year earlier, a government report yesterday showed, compared with the 2.3 percent median of economists’ estimates. The climb in consumer prices damps prospects of economic stimulus and comes after December data from retail sales to exports improved.

“It’s the first disappointing statistic we’ve seen out of China in a long time,” Stephen Leeb, chief investment officer of Leeb Capital Management Inc., who recommends buying Chinese stocks, said by phone in New York yesterday. “You’ve had a huge rally in China, and people are looking for an excuse to take some profits.”

Chinese inflation quickened 2 percent in November from a year earlier.

ETF Retreats

The iShares FTSE China 25 Index Fund (FXI:US), the largest Chinese exchange-traded fund in the U.S., declined 1 percent to $41.09, extending its weekly loss to 1.3 percent. The Standard & Poor’s 500 Index ended little changed, for a gain of 0.4 percent on the week.

The Shanghai Composite gauge of domestic Chinese shares fell 1.8 percent to 2,242.997, capping a 1.5 percent weekly decline, the first since the end of November. The Hang Seng China Enterprises Index (HSCEI) dropped 0.7 percent to 11,842.59, adding to a weekly loss of 0.8 percent.

American depositary receipts of Semiconductor, known as SMIC, slumped 5.3 percent to $3.06 in New York. The Shanghai- based technology manufacturer surged 117 percent from a July 20 low to Jan. 10. The stock is up 13 percent in the week.

“I wouldn’t chase after SMIC at the moment given its nice run-up recently, but rather wait for pull back and buy on any technical correction,” Rick Hsu, an analyst at JPMorgan Chase & Co. who rates SMIC the equivalent of buy, said Jan. 10. “I feel sentiment remains a bit skeptical on how it competes against Taiwanese peers, as well as how sustainable and significant it could turn around into profitability.”

Huaneng Acquisition

Beijing-based Aluminum Corp.’s ADRs dropped 3.5 percent to $12.82, the biggest decline since Oct. 26. The stock had previously gained 43 percent from a two-year low reached on Sept. 5.

Huaneng Power International Inc. (600011) slipped 2.6 percent to $36.14, the lowest price in almost three weeks. Huaneng agreed to buy a 50 percent stake in a fuel company from Huaneng Group for 108 million yuan ($17.4 million) and will inject $1.4 billion yuan into the business after completion of the acquisition, according to a Hong Kong stock exchange filing.

Beijing-based Baidu added 2.2 percent to $112.97, rising for a third day to the highest price since Oct. 26. Trading volume was 73 percent higher than the daily average over the past three months, data compiled by Bloomberg show.

China Lodging Group Ltd. (HTHT:US) led gains on the China-US measure, rising 5.2 percent to $17.92 on volume almost 10 times the three-month daily average. The Shanghai-based hotel operator said preliminary results showed its same-hotel revenue per available room rose 2 percent in the fourth quarter.

To contact the reporter on this story: Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • SMI
    (Semiconductor Manufacturing International Corp)
    • $4.69 USD
    • -0.03
    • -0.64%
  • ACH
    (Aluminum Corp of China Ltd)
    • $12.22 USD
    • 0.38
    • 3.11%
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