Chinese stocks traded in New York rose for the third week after a bigger-than-forecast increase in bank lending boosted investors’ expectations that the government is loosening credit to keep economic growth from slowing.
The Bloomberg China-US 55 Index (CH55BN) advanced 1.8 percent to 102.72 on Nov. 11 for a weekly gain of 0.5 percent, driven by commodity and utility companies. China Petroleum & Chemical Corp. (386), Huaneng Power International Inc. (600011) and Yanzhou Coal Mining Co. advanced. AsiaInfo-Linkage Inc. and Spreadtrum Communications Inc. climbed as earnings beat analyst estimates.
Chinese banks made 586.8 billion yuan ($92.5 billion) in new loans in October, the most since June, the People’s Bank of China said Nov. 11. The amount exceeded September’s 470 billion yuan and all 18 estimates in a Bloomberg survey, signaling China may be loosening credit limits to sustain growth amid Europe’s debt crisis. Chinese government data last week also showed exports growing while the pace of inflation slowed last month.
“The readings are overall positive to market sentiments as the data confirmed market expectations for a looser liquidity condition since October,” Ting Lu, a Hong Kong-based economist at Bank of America Corp. wrote in a Nov. 11 note. “As inflation worries ease and global macro uncertainties rise, the room for fine-tuning of monetary tightening is getting bigger.”
Inflation, Exports Slow
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., gained 0.2 percent last week to $37.80. The Standard & Poor’s 500 Index (SPX) advanced 0.9 percent during the period to 1,263.85, after American consumer confidence topped estimates and Italy’s Senate approval of debt- reduction plans eased concern about Europe’s debt crisis.
China’s consumer prices rose 5.5 percent in October from a year earlier, the slowest pace in five months, the government reported Nov. 9. October exports rose 15.9 percent from a year earlier, the slowest since December 2009, as the deepening debt crisis in Europe, China’s biggest overseas market, crimped demand.
Premier Wen Jiabao said last month the government will fine-tune economic policies as needed to sustain growth, which slowed to 9.1 percent in the third quarter from a year earlier, the least in two years.
Huaneng, China’s largest power producer, surged 11 percent last week in New York as Deutsche Bank AG upgraded the stock to “buy.” Analysts led by Michael Tong at the bank said in a report Nov. 8 China may allow a 2.5 percent to 5 percent increase in electricity tariffs in January because inflation has peaked and power shortages will increase up over the next three years. Huaneng (HNP)’s American depositary receipts climbed 3.1 percent Nov. 11 to $20.25 in New York trading.
China Petroleum, Asia’s biggest refiner also known as Sinopec, jumped 4.8 percent in the past five trading sessions in New York to $106.48, the highest level since February. The Beijing-based company said Nov. 11 it will invest $5.2 billion in buying a 30 percent stake in the Brazilian unit of Galp Energia SGPS SA, Portugal’s largest oil company.
Chinese energy companies have bid at least $16 billion for overseas oil and gas assets this year to expand reserves and supply China, the world’s largest energy consumer. Galp’s Brazilian holdings include a share in the biggest discovery in the western hemisphere since 1976.
Galp shares fell the most in three years in Lisbon trading Nov. 11 as analysts said they had expected a higher valuation for the assets, while Sinopec added 2.2 percent.
Yanzhou Coal Advances
The ADRs of Yanzhou Coal, China’s fourth-biggest producer of the fuel, increased 3.7 percent last week to $26.90. China’s thirst for power generation will push its share of global coal consumption to 48 percent in 2035, from 46 percent in 2009, according to an annual report of the International Energy Agency published Nov. 9. China will also contribute more half of the 19 percent rise in global coal supply by 2035, IEA said.
Spreadtrum Communications (SPRD), a Shanghai-based chip designer, jumped 8 percent at the end of last week to a record $28.71, after its third-quarter profit jumped 25 percent to 75 cents a share, beating the 65-cent mean estimate of six analysts surveyed by Bloomberg. Twelve of 14 analysts recommended to “buy” the company shares and two gave it a “hold.”
The Chinese yuan was little changed last week at 6.3424 a dollar, according to the China Foreign Exchange Trade System. The currency has risen 4.2 percent this year, the best performance among the 25 emerging-economy currencies tracked by Bloomberg.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slid 1.9 percent to 2,481.08 last week. The measure is trading at 11.7 times estimated earnings, compared with 14.8 for Indian stocks, 10.5 for Brazilian shares and 5.3 for Russian equities.
Online video sharing websites Tudou Holdings Ltd. and Youku.com Inc. are set to report their third-quarter earnings this week.
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