Huaneng Leads Gains as Deutsche Bank Says Buy: China Overnight

Chinese shares traded in New York rose as Huaneng Power International Inc. (HNP), the nation’s biggest power producer, jumped after Deutsche Bank AG raised the stock to “buy” and as concern waned that Europe’s debt crisis is deepening.

The Bloomberg China-US 55 Index (CH55BN) climbed 0.9 percent to a one-week high of 103.71 after Italian Prime Minister Silvio Berlusconi offered to resign, boosting optimism the nation will appoint a new leader who can tame the debt crisis. The American depositary receipts of Huaneng Power jumped 9.1 percent, the most since January 2009, to $20.44. Sina Corp., China’s Twitter- like website owner, rose 2 percent in after-market hours as third-quarter profit topped forecasts.

Deutsche Bank analysts led by Michael Tong recommended buying Huaneng, saying that China may allow a 2.5 percent to 5 percent electricity tariff increase in January because inflation has peaked and power shortages will pick up over the next three years. The statistics bureau may report today that China’s inflation rate fell to 5.4 percent in October from 6.1 percent in the previous month, according to the median forecast of economists surveyed by Bloomberg.

“The good news in Asia is, any kind of Euro convulsion will trigger a more dramatic easing in Asia,” Christopher Wood, equity strategist at CLSA Asia-Pacific Markets, said in a Bloomberg Television interview yesterday from San Francisco. “Both China and India have significant room to ease policy should they wish to.”

Policy Tightening

China’s central bank raised interest rates three times in 2011 to curb inflation and boosted lenders’ reserve requirement ratios on six occasions. The policy tightening helped slow growth in the world’s second-largest economy to 9.1 percent in the third quarter from a year earlier, the least in two years.

Global stocks rallied as Berlusconi made his resignation offer, which came after he failed to muster an absolute majority on a parliamentary ballot, obtaining only 308 votes in the 630- seat Chamber of Deputies yesterday.

In Greece, Prime Minister George Papandreou said a national unity government will be named “soon” and told his ministers to get ready to resign, spokesman Elias Mosialos said.

China’s government may report today industrial production in the world’s second-largest economy increased 13.4 percent in October, compared with 13.8 percent in September, according to the Bloomberg survey of analysts.

Yuan Gains

The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 1.9 percent to $38.95, the highest level in three months. The Chinese yuan strengthened 0.1 percent to 6.3462 a dollar yesterday, according the China Foreign Exchange Trade System. The currency has risen 4.1 percent this year, the best performance among the 25 emerging-economy currencies tracked by Bloomberg.

About 8 percent of China’s foreign trade is conducted in yuan, with the majority of that settled in Hong Kong, the city’s Executive Donald Tsang said in an interview at Bloomberg LP’s head office in New York. Yuan trade settlement in Hong Kong may reach 1.5 trillion yuan ($237 billion) by the end of this year, he said.

Hong Kong’s economy will probably expand 5 percent this year, slowing from a growth pace of 7 percent in 2010, as the European debt crisis roiled global markets, according to Tsang. He said his government will keep curbs on the housing market even after the value of home sales halved last month from a year earlier.

Suntech, Trina

The ADRs of Suntech Power Holdings (STP), the world’s largest maker of solar panels, gained 4.9 percent to a one-month high of $2.77 in New York, while they added 1 percent in Frankfurt, trading to 1.98 euros a share, the equivalent of $2.74.

Trina Solar Ltd. (TSL), China’s fifth-largest supplier of solar panels, rose 1.4 percent to $7.94 after its chief executive officer said most of the biggest solar-equipment makers may disappear in the next few years as plunging prices erode margins and drive the weakest out of business.

“This is the decade of mergers and acquisitions,” Jifan Gao, CEO of Changzhou, China-based Trina, said in an interview yesterday. “From now until 2015 is the first phase, when about two-thirds of the players will be shaken out.”

Chinese solar-equipment makers said tariffs sought by U.S. competitors would make it harder to expand the use of renewable energy. U.S. solar-equipment makers led by the U.S. unit of Bonn-based SolarWorld AG have asked the government to slap duties on more than $1 billion of Chinese imports.

China, the U.S. and other countries are all encouraging the use of alternative energy sources, driving costs down across the board, so it would be unfair to penalize China, Richard Weiner, an attorney for the Chinese Chamber of Commerce for Import and Export of Machinery and Electronic Products, told investigators with the U.S. International Trade Commission in Washington yesterday.

Mindray Sinks

Mindray Medical International (MR) Ltd., the country’s biggest medical-device supplier, sank the most on the Bloomberg index after failing to lift its profit forecast. The Shenzhen-based company left its 2011 estimate for non-GAAP net income growth at 10 percent while increasing its sales growth forecast to 20 percent from 16 percent. It also said in a statement Nov. 7 that its board approved a plan to buy back as much as $100 million of its shares.

“Investors have some concern about Mindray as it raised its top line guidance while the bottom line remained the same,” a move that the company’s executives didn’t provide a “good explanation” for, said Yale Jen, an analyst at Maxim Group LLC in New York. “The company’s share buyback plan shows it has no better use of its cash for mergers and acquisitions than returning it to shareholders.”

Sina rose 1.2 percent to $87.99 in after-market hours after saying non-GAAP third-quarter profit was 26 cents a share, more than the 22 cents mean estimate of 14 analysts surveyed by Bloombeg.

Yanzhou Coal Mining Co., China’s fourth-biggest producer of the fuel, climbed 4.7 percent to a two-month high of $28.07.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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