Bloomberg News

Hotels Lead Drop on Wen as Sina Rallies: China Overnight

February 20, 2013

Chinese stocks fell for a fourth day in New York, the longest stretch of declines in five months, after the nation ordered cities to limit home purchases and data showed foreign direct investment retreated in January.

The Bloomberg China-US Equity Index of the most-traded Chinese equities in the U.S. dropped 1.1 percent to a two-month low of 94.46 yesterday. China Lodging Group Ltd. and Home Inns & Hotels Management Inc. lost at least 6 percent. Vipshop Holdings Ltd. slid the most in three weeks before reporting earnings. Sina Corp. (SINA:US), owner of the Weibo micro-blogging site, posted the largest gain in two months on an unexpected profit.

Chinese Premier Wen Jiabao called on local authorities to “decisively” curb real estate speculation to rein in the property market, according to a statement after yesterday’s State Council meeting, while data showed foreign inflows fell for an eighth month. The China-US gauge has lost 5.7 percent in February after a rebound in Asia’s largest economy sent the benchmark index 8 percent higher in the previous two months.

“There’s a general degree of disappointment which people have had in terms of investing in China,” Michael Shaoul, the chief executive officer of Marketfield Asset Management LLC in New York, said by phone yesterday. “I don’t think the market will welcome more government measures on China’s housing sector. The slowdown in FDI represents an interesting pull-back by foreign investors.”

ETF Sinks

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund (FXI:US) in the U.S., fell for a second day, tumbling 1 percent to $39.04 in New York, the lowest price since Dec. 13. The Standard & Poor’s 500 Index retreated 1.2 percent to 1,511.95 in its biggest retreat in three months as minutes from the Federal Reserve’s last meeting showed a debate over further stimulus action.

American depositary receipts of China Lodging, a Shanghai- based budget hotel chain, sank 7.4 percent to $17.84, the steepest slump since Dec. 17. Home Inns, China’s biggest economy hotel operator, also based in Shanghai, dropped 6 percent to $28.94, the lowest close this year.

Record high tourists during the Chinese New Year may not result in better budget hotel performance in February, as “most leisure travelers were unlikely to travel long distance domestically owing to cold weather, shortage of transportation capacity and holiday customs,” Tian X. Hou, the founder of T.H. Capital LLC who has a hold rating on the stocks, wrote in an e- mailed note yesterday.

Sina Gains

7 Days Group Holdings Ltd., the Guangzhou-based company that announced a going-private plan (SVN:US) in September, added 2.2 percent to $12.77, the highest close since April 2012.

Sina’s shares climbed 5.4 percent to $56.35 in New York, the biggest gain since Dec. 17. The shares have rallied 12 percent this year.

The Shanghai-based company said first-quarter sales (SINA:US) at Sina, which also owns an online news portal, is expected to range from $115 million to $119 million, representing at least an 8 percent growth from a year earlier, according to a Feb. 19 statement. That compared with the $117.4 million average estimate of seven analysts compiled by Bloomberg before the release.

Registered users for Sina’s Twitter-like Weibo service increased 73 percent from a year earlier to 503 million by the end of 2012 and daily active users rose 82 percent to 46.2 million, Chief Executive Officer Charles Chao said on a conference call on Feb. 19.

‘Sounded Positive’

“The management sounded positive on Weibo’s trajectory,” Andy Yeung, a New York-based analyst at Oppenheimer & Co. who rates the stock the equivalent of buy, wrote in an e-mailed note yesterday.

Vipshop, the Guangzhou-based company that runs a discount online store for luxury-brand fashion, lost 4.2 percent to $23.36, extending is decline into a fourth day. The company is scheduled to report fourth-quarter result today after the close of U.S. trading.

Hollysys Automation Technologies Ltd. (HOLI:US), an automation system maker based in Beijing, jumped 4.4 percent to $13.47 in New York, the highest price since April 2011. The stock’s price target was raised to $15 from $13 at JPMorgan Chase & Co. Trading volume on its shares was 4.3 times the daily average over the past three months, data compiled by Bloomberg showed.

Hollysys said sales in the 2013 fiscal year will be as much as $410 million and adjusted profit is expected to reach $67 million, according to a Feb. 19 statement.

The Hang Seng China Enterprises Index added 1.4 percent to 11,683.04, rebounding from this year’s low, while the Shanghai Composite Index of domestic Chinese shares climbed 0.6 percent to 2,397.18, after a two-day decline.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

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


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Companies Mentioned

  • SINA
    (SINA Corp/China)
    • $38.28 USD
    • 0.76
    • 1.99%
  • FXI
    (iShares China Large-Cap ETF)
    • $40.53 USD
    • 0.19
    • 0.47%
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