Chinese equities declined the most in a week in New York, as companies from Phoenix New Media (FENG:US) to Youku Tudou Inc. (YOKU:US) dropped. Suntech Power Holdings Co. (STP:US) led gains among Chinese solar manufacturers.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. fell 0.7 percent to 103.96 yesterday. Phoenix, a TV and Internet news outlet sank 5.8 percent while video website operator Youku slid the most in a week. American depositary receipts of Suntech rose for the first time in five days and wealth management company Noah Holdings Ltd. (NOAH:US) jumped to the highest level since 2010.
U.S. lawmakers failed to reach an agreement to extend the government’s borrowing limit less than two days before the deadline. Ten-day volatility on the China-US gauge surged to 20 yesterday, from 14.6 two weeks ago as when a partial U.S. shutdown started. The NYSE Bloomberg Global Solar Energy Index (SOLAR) advanced to the highest since February 2012.
“Because Chinese ADRs are listed in the U.S., there’s an inevitable correlation even if there’s no real basis for it,” Erik Lam, director of Asian equity sales at Auerbach Grayson & Co. in New York, said by e-mail yesterday. “As we approach Oct. 17, we should naturally expect market volatility to continue and to even increase as Wall Street waits for Washington to come to a resolution to raise the nation’s debt limit.”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., slumped 1 percent to $38.12 in New York, snapping a four-day rally. The Chicago Board Options Exchange China ETF (FXI:US) Volatility Index, measuring predictions of price fluctuations in the ETF, surged the most in six days. The Standard & Poor’s 500 Index dropped 0.7 percent in its first decline in a week.
Phoenix New Media, a TV and Internet news outlet based in Beijing, slid to $10.99, slumping the most in a week, while Youku retreated 4.1 percent to $28.71 after a three-day rally.
China Lodging Group Ltd. (HTHT:US), operator of a budget-hotel chain based in Shanghai, declined 3.6 percent to $22.10, falling the most since August. Trading volume was four times the three-month average, data compiled by Bloomberg showed.
Suntech’s ADRs advanced 3 percent to $1.38 in New York, gaining the most in a week.
Holders of more than $1.5 million of defaulted securities initiated involuntary bankruptcy proceedings against Suntech on Oct. 14. Its China unit was forced into bankruptcy in March.
“Unfortunately solar stocks are not trading on fundamentals right now,” Gordon Johnson, an analyst with Axiom Capital Management Inc. in New York, said by phone. “Positive headlines have been more of a driver of the solar stocks than the actual fundamental performance.”
LDK Solar Co. (LDK:US), China’s second-biggest maker of solar wafers, climbed 1.8 percent to $1.74, after surging as much as 9.4 percent earlier. The stock has gained 21 percent this year after falling 66 percent in 2012.
Noah’s ADRs surged 13 percent to $19.79, the highest level since December 2010. Trading volume was 5.4 times the 90-day average. The company had the biggest jump on the China-US gauge.
The Hang Seng China Enterprises Index advanced 0.9 percent to 10,671.17 yesterday, the highest level in three weeks, while the Shanghai Composite Index slipped 0.2 percent to 2,233.41, after rising the previous two days.
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