Chinese stocks in New York rose a second day, led by web retailers and property companies, on prospects the recovery in the world’s second-largest economy will boost company earnings.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. added 0.2 percent to a two-week high of 92.88. Online bookseller E-Commerce China Dangdang Inc. (DANG:US) jumped the most in three weeks and fashion discounter Vipshop Holdings Ltd. (VIPS:US) climbed to a record high. E-House China Holdings Ltd. (EJ:US) posted the steepest rally in more than two weeks, while SouFun Holdings Ltd. (SFUN:US) rose to the highest level since Feb. 15.
China’s economy, which emerged from a seven-quarter slowdown at the end of 2012, will continue to rebound, fueling company profits, Citigroup Inc. said in a March 25 report. The New York-based bank maintained its forecast for earnings growth of as much as 15 percent for MSCI China Index stocks. China will work to open its economy, President Xi Jinping said yesterday at a meeting of the so-called BRICS nations in South Africa.
“As we get better sequential economic data out of China, the trend will continue upward showing improvement,” Joel Wells, a portfolio manager at Alpine Woods Capital Investors LLC, which has $6 billion of assets under management, said in an interview at Bloomberg’s headquarters in New York yesterday. “That will then flow through slowly to local Chinese equities. As China’s capital account opens up, we’ll probably see more faith in its equity markets.”
The iShares FTSE China 25 Index Fund (FXI:US), the largest Chinese exchange-traded fund (FXI:US) in the U.S., rose 0.1 percent to $37.35, while the Standard & Poor’s 500 Index (SPX) closed little changed at 1,562.85.
Dangdang, the biggest retailer of books online in China, surged 4.9 percent to $4.10 in New York, the steepest rally since March 5. Vipshop, based in Guangzhou, climbed 4.3 percent to $31.12, the highest level since its first day of trading in the U.S. March 23.
Real estate, information technology and consumer discretionary companies may have “strong” earnings momentum, Citigroup analysts led by Minggao Shen wrote in this week’s note.
E-House, a Beijing-based property agent, advanced 3 percent to $4.82 in U.S. trading, rising the most since March 11. SouFun, owner of China’s biggest real estate information website, gained 1.2 percent to $27.02.
Baidu Inc. (BIDU:US), which runs China’s most-used search engine, climbed 2.4 percent to $88.13, the biggest one-day gain in two months. Spreadtrum Communications Inc. (SPRD:US), a mobile-chip maker based in Shanghai, rallied 3 percent to $20.23, the highest level since Nov. 8.
Aluminum Corp of China Ltd. (2600), the country’s biggest producer of the light metal, declined 2.7 percent to $9.82 in New York, the lowest close since Sept. 10. The company’s American depositary receipts, each representing 25 underlying shares in the Beijing-based company, traded 2.6 percent below its Hong Kong stock, the widest discount in a month.
Chalco incurred a net loss of 4.98 billion yuan ($801 million) in the six months through December, according to results derived from its full-year earnings released yesterday. The loss widened from 174.6 million yuan a year earlier because of falling prices and higher alumina costs. The full-year loss of 8.23 billion yuan in 2012 was more than the 5.4 billion yuan median of 17 analysts’ estimates compiled by Bloomberg.
Guangshen Railway Co., which runs the only train line linking mainland China to Hong Kong, slumped 1.5 percent in New York to $24.94, the lowest close since March 12. Net income fell 27 percent in 2012 from the previous year to 1.3 billion yuan, according to an annual report that Shenzhen, China-based Guangshen filed yesterday to the Hong Kong stock exchange.
Hong Kong’s Hang Seng China Enterprises Index (HSCEI) climbed 1 percent to 11,033.61 yesterday, the highest close since March 14. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares added 0.2 percent to 2,301.26, after falling over the previous two days.
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