China Southern Airlines Co. (ZNH:US) rose the most in four months, leading gains among the biggest Chinese companies trading in the U.S. as the central bank’s move to boost lending eased concern that slowing growth will hurt corporate profits.
The Bloomberg China-US Equity Index (HSCEI) climbed 1 percent to a three-month high of 103.98 at the close of trading in New York. China Southern, the nation’s biggest air carrier by passengers, and China Eastern Airlines Corp. each rose the most since February. Weibo Corp. (WB:US) advanced as Credit Suisse Group AG recommended buying the microblogging service’s stock.
Stocks rallied after the central bank said it cut reserve requirements for some banks to support smaller companies and agriculture. The policy measure was the latest sign that China is taking action to counter a slowdown in the world’s second-largest economy. The government also has implemented tax breaks and accelerated some public spending. The country’s exports rose more than forecast last month, according to customs administration data released June 8.
“Better export numbers plus a selective cut to required reserve ratios, which should improve the overall liquidity” are driving the gain in stocks, Elena Ogram, a Zurich-based investor at Bank Bellevue AG, who oversees $50 million in emerging-market assets including Chinese stocks, said by e-mail. “Investors have taken it positively.”
The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund in the U.S., added 0.5 percent to $37.78, the highest level this year. The Standard & Poor’s 500 Index was little changed, after closing at a record for the seventh time in eight sessions, as investors weighed equity valuations.
China’s leaders are “determined to reform the economy” and the changes will have “incredible impact going forward,” Mark Mobius, who oversees about $50 billion as executive chairman of Templeton Emerging Market Group, said in an interview with Bloomberg Television on June 9. “I’m very optimistic.”
Mobius said he is interested in buying Chinese banks and property companies. Templeton is currently only invested in China Merchants Bank Co. among lenders, he said.
China Southern gained 5 percent to $15.45, the highest since April 21.
China Eastern rose 4.2 percent to $16.22. The airline said yesterday that its load factor, a measure of occupancy, gained 0.4 percent in May from a year earlier, after falling in the previous two months.
Weibo, which operates a social media website similar to Twitter Inc.’s, climbed 1.4 percent to $18.91. Credit Suisse started coverage with a rating the equivalent of buy and a $23 price target, implying a potential 23 percent gain from its closing price on June 9. The Beijing-based company, controlled by Sina Corp., completed a share offering in April.
Cheetah Mobile Inc. (CMCM:US), the maker of security software that’s backed by Kingsoft Corp. and Tencent Holdings Ltd., advanced 6.7 percent to $20.52, the highest since its U.S. listing on May 8. The Beijing-based company plans to set up a research and development center in Taiwan and is seeking to acquire a software developer on the island, the Commercial Times reported yesterday, citing Chief Executive Officer Sheng Fu.
The Hang Seng China Enterprises Index rose 1.1 percent to a five-month high of 10,518.80. The Shanghai Composite Index (SHCOMP) advanced 1.1 percent to 2,052.53, the biggest gain in four weeks.
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