Chinese solar companies declined, led by Suntech Power Holdings Co. Ltd. (STP) and Trina Solar Ltd. (TSL), after prices for the raw material used in most solar panels dropped and estimates for shipments were cut. Youku.com led the Bloomberg China-US 55 Index (CH55BN) to its highest level since Oct. 27.
Suntech, the world’s largest maker of solar modules, lost 3.6 percent to $2.64, increasing its 2011 drop to 67 percent. Trina, China’s third largest solar-panel maker, slid 3.1 percent to $7.83. The Bloomberg China-US 55 Index rose 0.6 percent to 102.77, extending two weeks of gains.
Solar firms are cutting profit forecasts as plunging prices spurred by a surge in Chinese manufacturing capacity crimps margins. Yingli Green Energy Holding Co. (YGE), China’s fifth-largest maker, expects to deliver 1,580 to 1,630 megawatts of photovoltaic modules in fiscal 2011, lower than the previous guidance, the company said in a statement yesterday. Renesola Ltd. (SOL), another Chinese maker, lowered its quarterly shipment forecast to 320 to 330 megawatts from 330 to 350 megawatts.
“Several solar module makers are likely to report earnings losses for the next four quarters,” said Aaron Chew, an analyst at Maxim Group LLC in New York, in a telephone interview. “It’s a really dire outlook.”
The Bloomberg China-US 55 Index of the most-traded Chinese stocks in the U.S. rose after the benchmark Shanghai Composite Index sank the most in two weeks on the mainland.
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose 1.3 percent. The Standard & Poor’s 500 Index of U.S. stocks advanced 0.6 percent, as the European Central Bank’s Juergen Stark predicted the region’s debt crisis will be controlled within two years.
Cnooc Ltd. (883), China’s largest offshore oil producer, fell as much as 2.3 percent after its deal to buy BP Plc’s $7.1 billion stake in Argentine crude producer Pan American Energy LLC collapsed. It erased losses and gained 0.5 percent to $196.08 after crude oil prices rose.
BP said it will repay a $3.5 billion deposit it had received for the sale by Nov. 14. The deal was scrapped 10 days after Argentina’s president ordered oil companies to repatriate export revenue. The failure of the deal to buy Argentina’s biggest oil exporter means Cnooc may struggle to meet its production growth targets next year, according to Gordon Kwan, Mirae Asset Securities Ltd.’s head of regional energy research in Hong Kong.
Spot prices of polysilicon, the raw material used in most solar panels, declined 4 percent in the past week, Bloomberg New Energy Finance data shows. Ninety percent of Chinese polysilicon makers may halt operations by the end of November because of declining spot prices, China Securities Journal reported yesterday, citing people it didn’t identify.
Yingli took a $40 million charge to cut the value of its inventory, while Renesola wrote down $19.4 million as both slashed margin forecasts.
Maxim’s Chew downgraded the recommendation for Trina to “sell” from buy with a 12-month target of $5. Ramesh Misra, an analyst at Brigantine Advisors cut his rating for Trina to “hold” from buy.
Yingli rose 1.1 percent to $3.73, paring its loss this year to 62 percent. LDK Solar Co., the second-largest maker of solar wafers, rose 1.3 percent to $3.82.
China’s domestic stocks fell, driving the Shanghai benchmark down 0.7 percent to 2,509.8, the biggest decline since Oct. 20. Premier Wen Jiabao, who is visiting in Russia, said that the government won’t waiver over property market curbs as it aims to bring home prices to a reasonable level, Phoenix TV reported.
Chinese stocks have fallen 11 percent this year after the central bank restricted home purchases, raised interest rates three times and lifted the reserve-requirement ratio to curb credit growth and tame inflation.
The tightening helped growth to 9.1 percent in the third quarter from a year earlier, the least in two years. Inflation probably eased to 5.4 percent in October, from 6.1 percent in September, according to the median forecast of economists surveyed by Bloomberg before a statistics bureau report on Nov. 9.
Premier Wen said Oct. 29 the government will “fine tune” policies as needed as the economy slows. The central government has unveiled measures including tax breaks and financial support for smaller companies that suffer from credit squeezes.
The Shanghai measure is trading at 11.8 times estimated earnings, compared with 15 for Indian stocks, and 12.5 for the S&P 500 index of U.S. shares.
Goldman Sachs Group Inc. advised buying Chinese stocks as the nation’s economy will grow “close to trend” in the coming quarters, spurred by easing credit and government measures to help small companies.
Goldman Sachs favors shares in the Hang Seng China Enterprises Index (HSCEI), which tracks domestic stocks trading in Hong Kong, because of their underperformance relative to the Standard & Poor’s 500 Index. The so-called H-shares index has lost 16 percent this year, compared with a 0.4 percent loss in the S&P 500 Index.
The Chinese yuan dropped 0.2 percent to close at 6.351 a dollar, according the China Foreign Exchange Trade System. The currency reached 6.3370 on Nov. 4, the strongest level since the country unified the official and market exchange rates at the end of 1993.
Commerce Minister Chen Deming said the yuan’s exchange rate is within a reasonable range, the Economic Information Daily reported yesterday, citing comments he made in Cannes, France, where the Group of 20 meeting was held.
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