Bloomberg News

Vipshop Leads ADRs’ Retreat on Ukraine Concern: China Overnight

March 03, 2014

Chinese stocks trading in the U.S. declined for a second day as Russia’s growing military incursion into Ukraine triggered a global equity selloff.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. slipped 0.4 percent to 101.95, while the iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., fell 1.2 percent to $34.96. Vipshop (VIPS:US) Holdings Ltd. tumbled the most in a week while LightInTheBox Holding Co. (LITB:US) declined to the lowest since Jan. 2.

The U.S. is weighing sanctions against Russia, which may lose its membership in the Group of Eight industrial nations afterPutin got lawmakers to approve troop deployments. China’s Communist Party leadership, which is wrestling with sustaining expansion while limiting debt risks, is set to announce this year’s growth target at a meeting this week.

“All investors are looking at Russia and Ukraine right now, as the market will react immediately to any escalation of the conflict,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by phone yesterday. “If Russia decides to be more aggressive toward Ukraine, that would increase tensions between Russia and the U.S. and the rest of the G8, and that would have a direct impact on the Chinese equities.”

The National People’s Congress in Beijing will announce this year’s target for gross domestic product after China pledge to shift away from growth amid environmental concerns and an unprecedented debt build-up. In a Bloomberg News survey, 63 percent of 30 economists predict a 7.5 percent target. China’s economy grew 7.7 percent in 2013, the same as in 2012.

Factory Gauges

A gauge of Chinese manufacturing fell in February to 50.2, the lowest since June, a government report showed on March 1, while a private index yesterday from HSBC Holdings Plc and Markit Economics indicated a contraction worsened to 48.5 last month. Numbers above 50 signal expansion.

“The Communist Party will probably discuss the ways to implement some reforms proposed in November,” Brendan Ahern, the New York-based managing director of Krane Fund Advisers LLC, said by phone. “The plan for the country’s economic growth, the status of Shanghai as a free trade zone, the reorientation of the economy from export-dependent to consumer oriented. All these issues worry both economists and investors.”

Vipshop, LightInTheBox

U.S. Secretary of State John Kerry is traveling to Ukraine and the United Nations Security Council will hold a meeting as western leaders seek to respond to Russia seizing control of the country’s Crimea region. Ukraine said Russia’s navy ordered two of its ships to surrender.

Vipshop, based in Guangzhou, dropped 2.7 percent to $127.76, after rallying 19 percent last week. LightInTheBox, a Beijing-based web retailer of lifestyle goods selling to overseas markets, dropped 4.5 percent to $8.09 in a seventh day of declines, extending its slide to 26 percent. NQ Mobile Inc. (NQ:US), an Internet security company based in Beijing, jumped 7.5 percent to $20.87, the most in six weeks.

The Standard & Poor’s 500 Index dropped 0.7 percent. The Shanghai Composite Index rose 0.9 percent to 2,075.24 yesterday while the Hang Seng China Enterprises Index (HSCEI) of mainland stocks traded in Hong Kong slumped 1.4 percent to 9,751.65, the biggest retreat in a month.

To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net

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


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Companies Mentioned

  • FXI
    (iShares China Large-Cap ETF)
    • $40.89 USD
    • 0.22
    • 0.54%
  • VIPS
    (Vipshop Holdings Ltd)
    • $213.24 USD
    • -0.86
    • -0.4%
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