Bloomberg News

LDK Tops Slump as SouFun Drops on Housing Curbs: China Overnight

April 01, 2013

Chinese equities fell in New York, led by solar stocks, after a government index showed manufacturing expanded less than economists predicted and the country’s largest cities tightened rules on home purchases.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. sank 1 percent to a two-week low of 91.29 yesterday. LDK Solar Co. (LDK:US), the world’s second-biggest solar wafer maker, tumbled to the lowest level in almost four months and Suntech Power Holdings Co. (STP:US) plunged a fourth day as industry executives said the company’s default last month will make it difficult for peers to obtain credit. Real estate website owner SouFun Holdings Ltd. (SFUN:US) slid to a one-week low.

China’s Purchasing Managers’ Index was 50.9 in March, government data released yesterday showed, below the 51.2 median estimate of 26 economists surveyed by Bloomberg News. Manufacturing in the U.S. also expanded less than forecast in March, according to data from the Institute for Supply Management. Beijing, Shanghai and other major cities released rules over the weekend to limit home purchases after the central government tightened regulations to rein in housing prices.

“We are not seeing the big growth out of China that many investors were hoping for, that’s concerning,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management Co., which oversees $170 billion, said by phone. “The Chinese stock market is definitely underperforming the U.S., which is very disappointing, as we had expected China to outperform by this time. The property measure may dent the economy in the near term as housing has been a source of growth.”

ETF Slumps

The iShares FTSE China 25 Index Fund (FXI:US), the largest Chinese exchange-traded fund (FXI:US) in the U.S., dropped 1.2 percent to $36.48 in New York, after losing 8.7 percent in the first quarter. The Standard & Poor’s 500 Index (SPX) declined 0.4 percent to 1,562.17 as the index for American manufacturing weighed on industrial shares. The S&P jumped 10 percent last quarter, while the Bloomberg China-US gauge slipped 7 percent.

Suntech, the world’s biggest solar-panel maker in 2011, sank 7.7 percent to 36 cents in the U.S., extending a four-day loss to 20 percent.

LDK, based in Xinyu, China, tumbled 8.2 percent to $1.01, the lowest close since Dec. 7. Yingli Green Energy Holding Co. (YGE:US), the largest solar panel maker globally by shipments, fell 7.9 percent to $1.75, the lowest price since Dec. 10.

Suntech defaulted on $541 million of convertible notes and eight banks filed a bankruptcy petition for its main unit last month. Yingli Chief Financial Officer Bryan Li, Trina Solar Ltd. (TSL:US) CFO Terry Wang and JA Solar Holdings Co. Chief Operating Officer Xie Jian said in separate interviews that they expect credit will be difficult to obtain and that they have no plans to sell debt.

Home Prices

JinkoSolar Holding Co.’s sale of 800 million yuan ($129 million) of bonds due January 2019 earlier this year is the only industry issuance in the last ten months, compared with two sales in the first half of 2012 that raised 2.5 billion yuan and six during 2011 valued at 6.2 billion yuan, according to data from Bloomberg New Energy Finance.

SouFun, owner of China’s largest real estate information website, slid 2.8 percent to $25.47 in New York, the lowest close since March 21. E-House China Holdings Ltd. (EJ:US), a property agent based in Shanghai, slipped 2.2 percent to a three-week low of $4.55.

About 17 Chinese cities had issued details of property curbs by the end of the first quarter. Beijing banned single- person households from buying more than one residence, while Shanghai prohibited banks from giving credit to third-home buyers, local governments said over the weekend.

New Oriental

New home prices in China climbed 1.1 percent last month from February, Beijing-based SouFun said in a statement yesterday, based on a survey of 100 cities. That’s the biggest increase since January 2011.

New Oriental Education & Technology Group Inc. (EDU:US), China’s largest private education company, sank 2.8 percent to $17.49 in New York, the steepest decline in four weeks.

Ambow Education Holding Ltd. (AMBO:US), a tutoring company based in Beijing, plunged 39 percent in the five days through March 22 before trading halted in the U.S. pending an announcement. Baring Private Equity Asia Ltd. terminated a buyout offer for Ambow March 25, saying the resignation of three directors made it impossible to proceed with the deal.

Yongye Buyout

Yongye International Inc. (YONG:US), a Beijing-based fertilizer maker that received a going-private proposal in October, said buyers confirmed that they are still interested in continuing with the deal in a statement yesterday.

The group, including Chairman Wu Zishen, Morgan Stanley’s private equity unit and Hong Kong-based Abax Global Capital Ltd., offered to buy the company at $6.6 per share. Yongye said fourth-quarter adjusted net income was 34 cents per share with sales rising 59 percent to $71.3 million. Trading in its shares was suspended March 15 in the U.S.

Bona Film Group Ltd. (BONA:US), a film company based in Beijing, tumbled 6.5 percent to a three-month low of $4.3 in New York before its planned earnings release after U.S. trading closed. Renren Inc. (RENN:US), a real-name social networking website operator in China, sank 4.5 percent to a record low of $2.76.

Apple Inc. (AAPL:US) Chief Executive Officer Tim Cook apologized for the company’s iPhone warranty and repair policies in China after criticism over customer service in its second-largest market. Apple is changing its practices to offer full replacements of older iPhones experiencing problems, Cook said in a letter posted on the company’s Chinese website yesterday.

The Shanghai Composite Index (SHCOMP) of domestic Chinese shares slipped 0.1 percent to 2,234.40 yesterday, after dropping 1.4 percent during the first three months of this year. Hong Kong’s stock market was closed for a holiday yesterday.

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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