Chinese equities fell in New York as Sina Corp. plunged to a six-month low after a rout in emerging-market currencies highlighted weakness in the global economy.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. dropped 1.9 percent to 96.90 yesterday. Sina, owner of China’s biggest Twitter-like service, dropped to the lowest level since July, while Youku Tudou Inc. (YOKU:US), an online video site, sank 5.4 percent. E-House China Holdings Ltd. (EJ:US), a real estate brokerage, and wealth manager Noah Holdings Ltd. (NOAH:US) also declined.
Equities fell in the U.S. and Europe after increases in interest rates by central banks from Turkey to South Africa failed to prop up currencies in developing nations, sparking concern that inflation will accelerate. Chinese stocks are also slumping on concern about corporate governance after the U.S. Securities Exchange Commission last week barred local affiliates of the four largest accounting firms from conducting audits for six months, according to Tony Hann, the head of emerging-market equities at Blackfriars Asset Management Ltd.
“There is a lot of concern about broader emerging-market currencies, and that caused general selling pressure,” Hann said by phone from London yesterday. “We had some scares over the SEC.”
The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., slipped 0.1 percent to $34.50. The Chicago Board Options Exchange China ETF Volatility Index, a measure of options prices and expectations of price swings, retreated 4.9 percent to 28.03 from the highest level since July 8.
The Standard & Poor’s 500 Index slumped 1 percent on disappointing earnings forecasts and the Federal Reserve’s plan to reduce stimulus even amid turmoil in emerging markets.
Sina, based in Shanghai, sank 7 percent to $66.84. The shares have dropped 21 percent this year, headed for the worst month since December 2011. Jefferies Group LLC cut its rating on Sina to hold from buy in a note dated Jan. 17 and reduced its price target by 21 percent to $85, citing a lack of advertiser interest in its Weibo unit.
Youku’s American depositary receipts slumped to $29.55, falling the first time this week. E-House, based in Shanghai, dropped 6 percent to $11.96.
Noah, a Shanghai-based wealth-management company, sank 5.5 percent to $13.63, extending its slump this year to 24 percent, the most on the China-US gauge.
China Credit Trust Co. started repaying investors in a high-yield product whose threatened failure spurred concern of further defaults and contributed to a sell-off in emerging-market stocks and currencies. The product, due Jan. 31, was structured to raise funds from wealthy investors for a coal miner, which then collapsed in 2012. China is struggling to bolster growth while transitioning from a reliance on smokestack industries to consumer-led expansion.
“We believe more trust products could come under distress this year as the economy slows,” Liao Qiang, a credit analyst at Standard & Poor’s, wrote in an e-mailed report yesterday. “The underlying risks to the assets of wealth management products and trust loans have yet to be alleviated.”
China will promote transportation infrastructure projects this year including railways, highways, ports, airports and urban rail, according to a statement posted yesterday on the website of the National Development and Reform Commission, the nation’s top planning agency.
Hollysys Automation Technologies Ltd. (HOLI:US), which sells signaling system to China’s high-speed rail lines, climbed 1.9 percent to a one-week high of $17.10. The Beijing-based automation system maker is scheduled to report earnings Feb. 17.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong added 1.4 percent to 9,898.02, rallying the most in a week. The Shanghai Composite Index (SHCOMP) climbed 0.6 percent to 2,049.91 in a second day of gains.
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