Chinese equities listed in the U.S. retreated from a one-week high, led by a drop in solar stocks, after a government report showed industrial companies’ profit growth slowed to the weakest pace in at least 10 months.
The Bloomberg China-US 55 Index (CH55BN) slumped 0.3 percent to 95.48 as trading closed in New York. Trina Solar Ltd. (TSL) and Suntech Power Holdings Co., the world’s largest maker of silicon-based solar panels, sank the most on the gauge on speculation increasing competition will further erode profits. Online-game operators Shanda Games Ltd. (GAME) and Changyou.com Ltd. (CYOU) lost more than 3 percent, the most among Internet companies.
Net income at industrial companies increased 24.4 percent in the first 11 months of 2011 from a year earlier, China’s National Bureau of Statistics said on its website yesterday. That’s down from 25.3 percent gain in the first 10 months and 27 percent in the first three quarters. Profits for state-owned enterprises last month declined 14.2 percent from a year ago.
Profit at most Chinese companies “will probably continue to be slow until they make some policy adjustments to help boost growth again,” said Jeff Papp, a Lisle, Illinois-based analyst at Oberweis Asset Management Inc. “Investors should find certain areas that the government is targeting to spend money on.”
Forty-one companies in the Bloomberg measure of the most- traded Chinese shares in the U.S. declined while thirteen rose after the Shanghai Composite Index sank 1.1 percent to 2,166.21, the lowest since March 2009. The Standard & Poor’s 500 Index (SPX) was little changed at 1,265.43.
China, the world’s second-largest economy, expanded 9.1 percent in the third quarter from a year earlier, down from 9.5 percent in the second. Consumer prices rose 4.2 percent in November from a year ago, the slowest pace in 14 months. The Chinese central bank cut the amount of cash lenders must set aside as reserves this month for the first time since 2008.
Suntech Power dropped 6.1 percent to a one-week low of $2.17 in New York trading. Trina, the fifth-largest supplier of solar panels in China, also slid 6.1 percent, the most since Dec. 14, to $7.04.
Prices for solar cells have skidded 62 percent this year as Chinese companies led by Suntech boosted production and won market share from European and Japanese rivals.
Foxconn Technology Group, the world’s biggest contract manufacturer of electronics including Apple Inc.’s iPhone, started work on a solar-module plant in China’s eastern province of Jiangsu near the headquarters of Suntech, according to a Dec. 22 statement of Funing county, where the plant is located. Trial production will begin in May, the company said in a statement.
New Solar Plant
Foxconn plans to build new factories with “undreamed-of scale and lower cost,” Jenny Chase, who leads a team of six solar analysts at Bloomberg New Energy Finance, said Dec. 23. “It will push capacity higher and prices lower.”
India may initiate an anti-dumping probe in a month focused on imports of Chinese solar products, China’s Commerce Ministry said in a statement Dec. 19, amid escalating U.S.-China trade fight over solar energy.
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., dropped 0.4 percent to $35.18. The Chinese yuan was little changed at 6.3226 per dollar, according to the China Foreign Exchange Trade System. It has appreciated 4.5 percent against the dollar this year, the most among the 25 emerging-market currencies tracked by Bloomberg.
China Unicom (CHU) (Hong Kong) Ltd., the nation’s second-largest wireless network carrier, lost 0.8 percent to $21.25. China Telecom Corp., the smallest one of the three mobile-phone operators, fell 0.7 percent to $57.85.
Oil producers declined even as crude oil futures rose in New York. PetroChina Co. (PTR), the largest oil producer in the country, declined 0.2 percent to $121.43. China Petroleum and Chemical Corp., known as Sinopec, retreated 0.6 percent, the most in a week, to $106.13.
Crude oil for February delivery rose 1.7 percent to $101.34 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 16.
The Shanghai benchmark stock measure is trading at an estimated price-earnings ratio of 10.4 times. That compares with 13.8 for Indian stocks, 10.3 for Brazilian shares and 4.6 for Russian equities.
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