Chinese equities (CH55BN:US) in New York rallied the most in almost three weeks, led by commodity producers and solar makers, as easing inflation damped concern Asia’s second-largest economy will tighten monetary policy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese stocks in the U.S. jumped 1.3 percent to 90.58 yesterday, the steepest advance since March 20. Suntech Power Holdings Co. (STP:US) climbed as much as 48 percent, while LDK Solar Co. surged 23 percent. Yanzhou Coal Mining Co. (YZC:US), Aluminum Corp. of China Ltd. and China Life Insurance Co. (LFC:US) rose the most since January. Vipshop Holdings Ltd. (VIPS:US) fell 3.3 percent.
Government data released yesterday showed Chinese consumer prices eased from a 10-month high in March, rising 2.1 percent after economists predicted 2.5 percent growth. Producer prices for raw materials also fell for the 13th straight month. The world’s second-largest economy is seeking to preserve growth after emerging from a seven-quarter slowdown while also checking inflation. The Shanghai Composite Index (SHCOMP) of domestic stocks rose the most since March 20.
“Right now it’s hard to imagine the government will take tightening measures as the CPI looks stable,” Clement Miller, an investment strategist at Wilmington Trust Investment Advisors Inc., which managed about $20.5 billion in assets at the end of 2012, said by phone from Baltimore. “With the long-term company profit growth outlook strong, and with the Chinese stock market very attractively valued, China is a country where you definitely want to be invested.”
The iShares FTSE China 25 Index Fund (FXI:US), the largest Chinese exchange-traded fund (FXI:US) in the U.S., jumped 1.7 percent to $36.24 in New York, the steepest one-day rally since March 20. The Standard & Poor’s 500 Index gained 0.4 percent to 1,568.61.
China’s exports in March increased 11.7 percent from a year earlier, according to the median estimate of 36 economists in a Bloomberg News survey, before the customs administration reports the figures today. Overseas shipments grew 21.8 percent in February.
Companies on the China-US gauge are trading 13.5 times estimated forward earnings, 4.5 percent below the S&P 500’s valuation, according to data compiled by Bloomberg. The discount widened to 5.4 percent on April 8, the biggest since December 2008.
The 2.1 percent growth in March consumer prices compared with a 3.2 percent gain in February, and producer prices fell 1.9 percent last month, extending a slump that started from March of 2012, according to figures from the National Bureau of Statistics in Beijing.
“If you look at CPI as a kind of proxy for prices companies sell at, and producer price index as a proxy for the cost for inputs, it shows a better profitability outlook for companies,” Wilmington Trust’s Miller said.
Yanzhou Coal, the nation’s fourth-largest miner of the fuel, advanced 4.7 percent to $12.59, rallying the most since Jan. 2. Aluminum Corp. (ACH:US), China’s largest maker of the light metal, known as Chalco, also surged 4.7 percent to $9.63 in New York, the steepest gain since Jan. 10. Its ADRs, each representing 25 underlying shares, traded 3.1 percent above the Hong Kong stock, the highest premium (ACH:US) this year.
ADRs of China Life, the nation’s biggest insurer, surged 3.8 percent to $39.10, rising the most in three months.
The Beijing-based insurer’s first-quarter premium income declined 2 percent from a year earlier, which was better than what investors had expected, the Shanghai Securities News reported yesterday, citing results it received from an unidentified source. On a monthly basis, the insurer’s premium in March improved from the previous month, and April income is expected to gain from a year earlier, according to the report.
Suntech, the world’s biggest solar-panel maker in 2011, jumped 29 percent to 62 cents in New York, the biggest advance since November 2011. The shares have gained 49 percent over the past two days.
The Wuxi-based company, which defaulted on a $541 million bond repayment last month, had slumped 29 percent as of last week since Chinese banks filed an insolvency petition for its main unit March 20. A news service owned by Hong Kong Economic Times said April 8 Warren Buffett’s MidAmerican Energy Holdings Co. may buy the solar panel maker, citing an unidentified person.
Suntech “doesn’t comment on speculation,” Shashin Surti, the company’s external communications manager at Weber Shandwick, said by e-mail yesterday.
The solar maker received a notice from the New York Stock Exchange that it failed to meet the criteria for continued listing as the price (STP:US) of its ADR was below $1 for 30 consecutive days through April 4, it said in a statement yesterday. It’s the second time for Suntech to get such a warning, after ADR prices dropped below $1 for the first time in August. Suntech intends to “cure this deficiency” within a six-month time frame in accordance with NYSE rules, it said.
LDK, based in Xinyu of Jiangxi province, surged to $1.32, the largest rally since March 26. Yingli Green Energy Holding Co. (YGE:US), the world’s biggest solar panel maker by shipments, climbed 21 percent to $2.24 on a fourth day of gains. Trina Solar Ltd. (TSL:US) added 15 percent to $4.4.
Online fashion retailer Vipshop dropped to $29.99 in the biggest one-day slump since March 18.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong jumped 1.7 percent to 10,610.77 yesterday, the biggest advance in three weeks. The Shanghai Composite climbed 0.6 percent to 2,225.78 after a four-day slump, rebounding from the lowest level in 2013.
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