Bloomberg News

Sina Drives ADR Retreat Amid Internet Crackdown: China Overnight

April 21, 2014

Chinese stocks trading in New York fell, led by microblog owner Sina Corp., after the country closed 110 websites in a nationwide drive to crack down on Internet pornography.

The Bloomberg index of the most-traded Chinese stocks in the U.S. slipped 0.3 percent to 100.25. Sina Corp., whose Twitter-like unit Weibo Corp. debuted in American trading last week, dropped the most in a week. Qihoo 360 Technology Co., the country’s second-biggest online search engine, retreated for the first time in five days.

About 3,300 accounts on China-based social networking services, including Tencent Holdings Ltd.’s WeChat and Sina Weibo, were deleted as part of the crackdown, Xinhua News Agency reported yesterday. Sina and Baidu Inc., owner of China’s most-popular search engine, pledged their support for the campaign, Xinhua said. China, home to 618 million Internet users, censors the Internet by blocking websites such as Facebook and deleting postings that it deems as a threat to social stability.

“This kind of government-related crackdown should negatively impact stocks, but usually it should be just a temporary impact,” Echo He, a senior equity analyst at New York-based Maxim Group LLC, said by phone. “It doesn’t fundamentally affect how well the company could grow and how much revenue the company could earn.”

The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., slumped 0.6 percent to $35.59. The Standard & Poor’s 500 Index added 0.4 percent as investors assessed earnings reports and a Conference Board gauge of the economic outlook in the U.S. for the next three to six months showed the expansion will strengthen.

Company Earnings

China’s top court said last year Internet users could face jail time for posting comments deemed defamatory that are viewed by more than 5,000 people or retweeted more than 500 times, giving authorities a legal basis to put those who post rumors on trial.

Sina dropped 0.9 percent to $56.02, while Qihoo sank 2.5 percent to $91.49, the most in more than a week.

Stocks pared earlier losses of as much as 1.1 percent as investors prepare for company earning reports in the coming weeks. Cnooc Ltd. (CEO:US), China’s biggest offshore oil and gas explorer, releases its first-quarter operations review today and tutoring company Tal Education Group. (XRS:US) reports quarterly earnings for the period ended Feb. 28. Baidu reports later this week.

Tal rose 5.4 percent to $23.09, leading gains on the Bloomberg China-US Equity Index. The company will say sales grew (XRS:US) 43 percent in its fiscal fourth quarter 2014, compared with a 14 percent expansion a year earlier, according to the average of three analyst estimates compiled by Bloomberg.

Renren Inc., a social networking site, climbed 1.2 percent to $3.43, a one-month high. The company had tumbled 9.4 percent in March.

Trading in Hong Kong was closed for a holiday. The Shanghai Composite Index (SHCOMP) fell 1.5 percent to 2,065.83.

To contact the reporter on this story: Alexandria Baca in New York at abaca3@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Marie-France Han, Rita Nazareth


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Companies Mentioned

  • FXI
    (iShares China Large-Cap ETF)
    • $40.34 USD
    • 0.98
    • 2.43%
  • CEO
    (CNOOC Ltd)
    • $131.59 USD
    • 4.66
    • 3.54%
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