Bloomberg News

Yanzhou Slumps as Manufacturing Drop Sinks ADRs: China Overnight

January 02, 2014

Chinese stocks fell the most in two weeks in New York, led by commodity producers, as declines in manufacturing indexes spurred concern growth is slowing in the world’s second-largest economy.

The Bloomberg China-US Equity Index of the most traded Chinese stocks in the U.S. retreated 1.4 percent to 104.60 yesterday, following a 6.9 percent gain in 2013. Yanzhou Coal Mining Co. (YZC:US), China’s fourth-largest coal producer, tumbled 9 percent, while China Petroleum and Chemical Corp. slid to a two-month low. Yingli Green Energy Holding Co. surged 24 percent after announcing a joint venture with a state-owned company, and Melco Crown Entertainment Ltd. (MPEL:US) rose to a record.

A Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics fell to 50.5 from 50.8 the previous month, and a separate official gauge declined to 51 from 51.4, according to data released since Jan. 1. Laban Yu, a Hong Kong-based analyst at Jefferies Group LLC, said in a note yesterday that China’s benchmark Qinhuangdao coal prices “may collapse in a rout,” after rising to a six-month high last week.

“If you think growth in China is slowing and moving away from fixed-assets investment, then it’s hard to get bullish on commodities,” Tony Hann, head of emerging-market and equities at Blackfriars Asset Management Ltd., said by e-mail from London yesterday.

The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., sank 3.3 percent to $37.12 in New York, the lowest price since Nov. 14. The Chicago Board Options Exchange China ETF Volatility Index, which measures expected swings in the ETF, surged 13 percent to 24.49, the most since June. The Standard & Poor’s 500 Index fell 0.9 percent yesterday after jumping 30 percent in 2013 and finishing the year at a record high for the first time since 1999.

Coal Collapse

American depositary receipts of Yanzhou, based in Shandong, sank to $8.40, the biggest retreat since June. Yanzhou’s ADRs tumbled 46 percent in 2013 in a third year of declines.

China’s Qinhuangdao Coal Price, the benchmark for thermal coal, increased to as much as 610 yuan ($100.8) per metric ton as of Dec. 29, the highest level since June, according to data from China Coal Transport and Distribution Association.

Jefferies said in a note that the Qinhuangdao prices may drop after the rout as record production in China’s Shanxi province may inundate the Qinhuangdao port this month. The company has ratings equivalent to sell on Chinese coal mining companies including Yanzhou.

Yingli Soars

China Petroleum, Asia’s biggest refiner and known as Sinopec, dropped 2.7 percent to $79.93 in New York, the lowest level since Oct. 30. The ADRs, each standing for 100 underlying shares in the company, traded 1.2 percent below its Hong Kong stock, the widest discount since Dec. 11.

Beijing-based Sinopec said a regulatory approval to sell as much as 30 billion yuan of convertible bonds expired on Dec. 31, according to a Hong Kong Stock Exchange filing yesterday.

Yingli, the biggest solar-panel maker, set up a joint venture with Datong Coal Mine Group to develop and construct solar power plants in China’s northern Shanxi province, according to a statement yesterday. Vishal Shah, a New York-based analyst at Deutsche Bank AG, said the joint venture is “an incremental positive” in an e-mailed report yesterday.

“The assumption people are making is that this means the Chinese government will now allow for Yingli to get financing to build out utilities for the solar projects,” Gordon Johnson, an analyst at Axiom Capital Management in New York, said by phone yesterday.

Yingli’s ADRs surged to $6.28 in New York, rising the most since March 2009.

Casino Revenue

Melco Crown, which operates gambling facilities in Macau, the only Chinese city where casinos are legal, advanced 2.3 percent to $40.11, the highest since its U.S. trading started in December 2006. The ADRs traded 2.5 percent higher than its Hong Kong-traded shares, the biggest premium since Nov. 21.

Gaming revenue from the six operators of Macau casinos rose 18.6 percent to 360.75 billion patacas ($45.2 billion) last year, the city’s Gaming Inspection and Coordination Bureau said yesterday. That compared with the average estimate of a 18 percent growth from five analysts compiled by Bloomberg News. The Las Vegas Strip generated $5.8 billion in the first 11 months.

The Hang Seng China Enterprises Index in Hong Kong slumped 1 percent to a one-week low of 10,709.34, after falling 5.4 percent last year. The Shanghai Composite Index (SHCOMP) retreated 0.3 percent to 2,109.39. It dropped 6.8 percent in 2013.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • YZC
    (Yanzhou Coal Mining Co Ltd)
    • $8.55 USD
    • 0.24
    • 2.81%
  • MPEL
    (Melco Crown Entertainment Ltd)
    • $25.05 USD
    • 0.24
    • 0.96%
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