Chinese stocks climbed for the first time in four days in New York, led by Youku Tudou (YOKU:US) Inc., as rising industrial profits added to signs the world’s second- largest economy is recovering.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. added 0.1 percent to 99.72 in New York. Youku Tudou, owner of China’s most-used video websites, jumped to a seven-month high after Deutsche Bank AG rated it a new buy. Qihoo 360 Technology Co. Ltd. (QIHU:US), a Beijing-based Internet software developer, dropped after saying that its applications were removed from Apple Inc. (AAPL:US)’s iTunes store. Suntech Power Holdings Co. (STP:US) led a slump in solar stocks.
Net income for Chinese industrial companies increased 17.3 percent from a year earlier to 895 billion yuan ($144 billion) in December, the National Bureau of Statistics said Jan. 27, after a 22.8 percent jump in November. Earnings for the full year gained 5.3 percent. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares rallied to the highest level since June.
“This industrial profits data is certainly favorable and it’s one of several positive economic indicators that we’ve been seeing lately coming out of China,” Tim Ghriskey, chief investment officer at Solaris Group LLC, which manages about $2 billion in assets including Chinese stocks, said yesterday by phone in New York. “It’s certainly made us re-look our exposure to China and we’re more inclined to increase it at this point.”
The iShares FTSE China 25 Index Fund (FXI:US), the largest Chinese exchange-traded fund in the U.S., slipped 0.3 percent to $40.96, extending last week’s 1.4 percent decline. The Standard & Poor’s 500 index fell 0.2 percent to 1,500.18 after a report showed pending home sales declined in December, overshadowing an increase in durable goods orders.
Youku Tudou jumped 6.6 percent to $24.39, the highest close since June 13. Deutsche Bank equity analyst Alex Yao gave the Beijing-based company a 12-month target price of $29.56 per share in initiating coverage.
The stock has advanced 12 percent over the past six days, its longest winning streak since December 2010. Youku’s 34 percent surge this year has made it the biggest gainer on the Bloomberg China-US gauge, which has climbed 0.6 percent in 2013.
Baidu Inc. (BIDU:US), owner of China’s most-used web search engine, rose 3.1 percent to $111.39 in New York, the biggest jump in two weeks. Baidu is preparing to start a real-time bidding platform, which it may announce this year, according to a report in the Marbridge Daily yesterday, citing unnamed people in the Chinese advertising industry. Baidu spokeswoman Patricia Graue declined to comment on the report when contacted by phone in San Francisco yesterday.
Industrial sector profits may grow by an average 30 percent this year, Standard Chartered Plc economists Stephen Green, based in Hong Kong, and Shen Lan, in Shanghai, wrote in a Jan. 17 note. Chinese economic growth may accelerate to 8.1 percent this year from 7.8 percent in 2012, according to the median of 44 analysts surveyed by Bloomberg News this month.
Guangshen Railway Co. Ltd. (GSH:US), which operates trains in China’s Guangdong province, added 1.5 percent to $21.96 in U.S. trading, the highest close since November 2010. The company’s American depositary receipts have gained 31 percent since Dec. 7.
Hong-Kong based Seaspan Corp. (SSW:US), a container ship operator, rallied 1.7 percent to $18.81, the highest price since March 16.
Chinese exchange-traded funds will lead gains among their Asian peers this year as inflows increase amid a recovery in the nation’s economy, according to Stifel Nicolaus & Co. Chinese ETFs attracted about $1.2 billion in the first three weeks of 2013 as data showed the country’s economy has emerged from its seven-quarter slowdown. Funds have recorded inflows for 13 of the 16 days through Jan. 23, a record streak, according to data researcher EPFR Global.
Beijing-based SouFun Holdings Ltd. (SFUN:US) dropped 2.5 percent to $26.77 yesterday in New York, the lowest close since Jan. 4. The company was downgraded to neutral from buy by Goldman Sachs Group Inc. analyst Fei Fang yesterday, while the price target was raised to $26 from $24.
Qihoo fell 1.5 percent to $31.50, the lowest close since Jan. 16. The company’s applications were “abruptly removed” from Apple’s iTunes store for no reason, Qihoo Chief Financial Officer Alex Xu said by e-mail yesterday. The company doesn’t expect the incident to have any meaningful financial or operational impact, Xu said. Apple spokesman Tom Neumayr declined to comment on whether Qihoo’s apps had been removed when contacted by phone.
Separately, Qihoo management was called in to the Beijing Industrial and Commercial Administration Bureau and received an executive warning that its use of anti-virus software in Internet browsers was considered unfair competition, according to a Jan. 24 posting on the watchdog’s microblog.
Suntech slumped 6.6 percent to a three-week low of $1.56. The world’s biggest solar-panel maker, based in Jiangsu, China, has lost 11 percent in the last four trading days. Changzhou- based Trina Solar Ltd. (TSL:US) retreated 3.3 percent to $4.91 in New York, the lowest close in three weeks.
The Hang Seng China Enterprises Index added 0.8 percent to 12,100.08 yesterday, the biggest jump in a week, while the Shanghai Composite gauge climbed 2.4 percent to 2,346.51, the highest close since June 1.
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