Chinese equities rose to the highest level in two years in New York, led by Internet companies Baidu Inc. (BIDU:US) and Qihoo 360 Technology Ltd., as economic growth accelerated for the first time in three quarters.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. advanced 1.7 percent to 107.13, the highest close since September 2011. The gauge gained 2.3 percent for the week. Baidu, owner of the nation’s largest search engine, rose to the highest on record, while software developer Qihoo climbed 8.1 percent. Real-estate broker E-House China Holdings Ltd. (EJ:US) jumped to a one-month high as a government report showed home sales surged in September from a month earlier.
Gross domestic product rose 7.8 percent in the July-September period from a year earlier, the fastest expansion since December, the National Bureau of Statistics said. Companies on the China-US gauge will report an average 35 percent increase in profit during the third quarter, according to data compiled by Bloomberg.
“Bearishness toward the Chinese economy” is fading, Michael Ding, lead manager of the China Region Fund (USCOX:US) at U.S. Global Investors, which oversees $2.2 billion, said by phone from San Antonio, Texas yesterday. “The economy is robust enough to make the transition to consumption-led growth from investment-led growth. Internet stocks are related to consumption, which is supported by disposable income.”
The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., advanced 0.1 percent to $38.15 in New York, trimming its weekly slump to 0.6 percent. The Chicago Board Options Exchange China ETF Volatility Index, measuring predictions of price fluctuations in the ETF, declined 5.4 percent to 21.46.
The Standard & Poor’s 500 Index added 0.7 percent to a record 1,744.5. It gained 2.4 percent on the week as earnings results from Google Inc. and General Electric Co. topped estimates and as speculation grew that the Federal Reserve will maintain its rate of asset purchases after Congress ended the standoff over the federal budget and borrowing authority.
Companies on the China-US gauge are poised to report average earnings of $2.14 a share during the third quarter, from $1.58 in the year-ago period, data compiled by Bloomberg show.
Baidu surged 7.9 percent to $165.91 yesterday, the highest price since its 2005 debut. Trading volume for American depositary receipts of the Beijing-based company was 87 percent higher than the daily overage over the past 90 days. ADRs of Qihoo (QIHU:US), operator of China’s second-largest search engine, climbed to a record $94.67.
Google Inc., the world’s largest search-engine company, reached $1,000 for the first time yesterday amid optimism about new advertising for wireless devices and online video. The stock, sold at $85 in a 2004 initial public offering, jumped 14 percent to $1,011.41 after the company reported third-quarter sales and profit that beat estimates on Oct. 17.
E-House, based in Shanghai, added 4.9 percent to $9.88 as trading volume rose to 88 percent above the three-month average.
China’s home sales jumped 34 percent in September as authorities refrained from adding to property curbs, emboldening buyers. The government in March stepped up a three-year campaign to cool the housing market by ordering the central bank to raise down-payment requirements for second mortgages in cities with excessive cost gains. Some Chinese cities are facing increasing pressure to meet the annual home-price targets they set earlier this year, and to cap gains at the growth rate of local disposable incomes.
Melco Crown Entertainment Ltd. (MPEL:US), which operates gambling facilities in Macau, surged 5 percent to $36.51, a record high.
Sands China Ltd. (1928), the Macau casino operator controlled by billionaire Sheldon Adelson, reported on Oct. 17 that adjusted property earnings before interest, taxes, depreciation and amortization increased 62 percent to $785.3 million in the third quarter, beating analyst estimates, as its new resort drew more gamblers.
The Shanghai Composite Index of domestic bourse rose 0.2 percent to 2,193.78, trimming a weekly drop of 1.5 percent. The Hang Seng China Enterprises Index (HSCEI) advanced 0.7 percent to 10,644.04, ending the week with a 0.6 percent increase.
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