Chinese stocks rallied to a six-month high in New York as better-than-estimated revenue forecasts boosted Internet companies from Sina Corp. to NQ Mobile Inc. (NQ:US)
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. climbed 1.5 percent to 97.41 yesterday, the highest level since Feb. 6. Sina, a Twitter-like service provider, rose to the highest since 2011 and mobile security software company NQ soared 23 percent. Renren Inc. (RENN:US) jumped 15 percent following a news report it was selling a unit to Baidu Inc. (BIDU:US) Vipshop Holdings Ltd. tumbled after Citron Research wrote on Twitter that the company’s shares may drop more than 50 percent.
Among companies on the China-US gauge that reported earnings since July 21, 95 percent have surpassed analysts’ average projections, compared with 59 percent a year ago, according to data compiled by Bloomberg. At least four analysts raised their price estimates for Sina after its second-quarter earnings beat the mean projection, while the price targets for NQ and WuXi PharmaTech Cayman Inc. (WX:US) were also increased.
“Chinese Internet companies have overall reported better-than-projected earnings,” Echo He, a New York-based senior analyst at Maxim Group LLC said by phone yesterday. “Advertising revenues at most Internet companies look strong, which may be leading a recovery in the broader economy.”
The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund (FXI:US) in the U.S., climbed 2 percent in its fourth day of gains to a two-month high of $36.38. The Standard & Poor’s 500 Index added 0.3 percent as data on retail sales reinforced signals the economy is expanding moderately.
Sina advanced 3.2 percent to $82.90, the highest price since November 2011. Shanghai-based Sina forecast sales of as much as $180 million (SINA:US) for the third quarter, compared with the average $165.6 million average of nine analysts compiled by Bloomberg. Its second-quarter adjusted profit of 21 cents per share compared with the 12-cent analysts’ mean projection.
At least 10 analysts, including Piyush Mubayi at Goldman Sachs Group Inc., yesterday lifted (SINA:US) their price estimates for Sina’s shares.
NQ’s American depositary receipts surged to $19.51, the highest since its initial public offering in May 2011.
The Beijing-based company raised its 2013 revenue estimate to as much as $188 million from its prior forecast of up to $184 million. The average projection of five analysts in a Bloomberg survey was $182 million. Second-quarter profit also exceeded analysts’ mean estimate.
Renren, owner of a social networking website, soared to $4.58, the highest level since June 2012. The Beijing-based company is scheduled to report second-quarter earnings after markets close today.
Baidu, which owns China’s most-used web search engine, has been talking with Renren for two months to buy its Nuomi unit, according to a report on Sohu.com’s website yesterday.
“The driver for Renren’s gain should be speculation that it will sell its Nuomi unit to Baidu, which is positive,” Andy Yeung, an Internet stock analyst at Oppenheimer & Co. in New York, said by phone. “There is also expectation that Renren earnings will do better because the second-quarter results of other Internet companies showed that the overall advertising market is improving.”
An e-mail to Renren’s public relations department seeking comment wasn’t immediately returned. Baidu’s Beijing-based spokesman Kaiser Kuo declined to comment on the report by phone.
Baidu’s ADRs climbed 3.5 percent to $141.53, the highest since April 2012.
E-Commerce China Dangdang Inc. (DANG:US) soared 11 percent to $11.71, rising the most since June 25. The Beijing-based book retailer is scheduled to report second-quarter results before U.S. markets open tomorrow.
Phoenix New Media Ltd. (FENG:US), an Internet and television news outlet, surged 7.4 percent to $8.83, the highest level since August 2011. Net income at the Beijing-based company jumped 120 percent in April-June while sales increased 29 percent to 364.2 million yuan ($59.5 million), it said in a Aug. 12 statement. That exceeded its own forecast of 341 million yuan given in May.
Vipshop, a Guangzhou-based online fashion retailer, tumbled 6.8 percent to $45.36, trimming its 2013 gain to 154 percent.
Citron Research wrote the number of users on Vipshop’s website declined 20 percent in June from a month earlier in a Twitter post yesterday, attaching a note by Macquarie Group Ltd., which cited figures from data provider iResearch.
“Given the good run Vipshop had this year, investors would sell for profit on any negative news,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million of assets, said by phone from Lisle, Illinois. “It’s hard to extrapolate anything from just one-month data which accuracy we aren’t sure about.”
Jeremy Peruski at ICR Inc., Vipshop’s external investor relations manager, couldn’t be reached by phone. Andrew Left, the founder of Citron Research, confirmed the post by phone yesterday, adding that he started a short position on Vipshop.
Sohu’s shares slid 5 percent to $61.32 in New York, dropping the most in two weeks, after news website DoNews said negotiations to sell its search engine to Qihoo 360 Technology Co. (QIHU:US) ended.
Eric Yuan, Sohu’s media manager, couldn’t be reached by phone after business hours in Beijing. Lee Roth, Qihoo’s external public relations manager at The Piacente Group Inc., didn’t immediately return a call seeking comment.
The Hang Seng China Enterprises Index in Hong Kong advanced 2.6 percent to 10,185.55 after a four-day rally. The Shanghai Composite Index (SHCOMP) climbed 0.2 percent to 2,106.16, the highest level since June 19.
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