Yanzhou Coal, Mindray Jump on Earnings Outlook: China Overnight

Chinese stocks (CH55BN) traded in the U.S. rose, led by Yanzhou Coal Mining Co. (YZC) and Mindray (MR) Medical International Ltd., on speculation looser lending conditions may boost company earnings.

The Bloomberg China-US 55 Index (CH55BN) advanced 1.2 percent to 99.75 as trading closed in New York, taking its increase this year to 4.1 percent. Yanzhou, China’s fourth-largest coal producer, gained 4 percent to $21.82 as investors bet lending growth will boost energy consumption. Mindray added 6.1 percent, the most since May, after the maker of medical devices predicted net revenue rose 25 percent in 2011 from a year ago.

China’s central bank said yesterday that new loans totaled 640.5 billion yuan ($101 billion) in December, the most since April, and M2 (CNMS2YOY), a measure of money supply, rose more than economists forecast. People’s Bank of China Governor Zhou Xiaochuan said Jan. 8 that the nation must be ready to combat possible shocks from Europe’s debt crisis and an uncertain U.S. economic outlook, echoing comments by Premier Wen Jiabao.

“We have more evidence now that the turning point of monetary policy easing has started and that’s very positive for stocks,” said Wu Kan, a fund manager at Dazhong Insurance Co., which oversees $285 million. “Low-valuation cyclical stocks will benefit most from it.”

The Shanghai Composite Index (SHCOMP) gained 2.9 percent to 2,225.89 at the close, its biggest advance since Oct. 12. The Hang Seng China Enterprises Index (HSCEI), which tracks Chinese companies trading in Hong Kong, gained 2.4 percent.

The Standard & Poor’s 500 Index of U.S. stocks added 0.2 percent to 1,280.70, while The iShares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., rose 2.1 percent to $35.92.

M2 Rises

The central bank said M2 rose 13.6 percent in December, the most since July. The median forecast of 18 economists surveyed by Bloomberg was for an increase of 12.9 percent.

China must be ready to pick appropriate policy instruments to combat external shocks, PBOC’s Zhou said in an interview with Xinhua on Jan. 8.

The Chinese economy “is yet to hit the rocks, not this year,” Yu Yongding, a former central bank adviser, said at a conference in New York yesterday. “China’s economy will be OK this year. I’m cautiously optimistic.”

SouFun Holdings Ltd., owner of the nation’s biggest real estate website, jumped 12 percent to $16.83, the highest since September and the biggest gain among companies in the benchmark Bloomberg index.

Perfect World Sinks

Perfect World Co. (PWRD), a Beijing-based online game developer, tumbled 27 percent, the most since its initial public offering in July 2007, to $8.81. The company sank after claims that the company is being investigated by U.S. and Chinese regulators “were made by a self-proclaimed insider on several Chinese websites, which were later picked up by several Chinese news outlets,” Andy Yeung, an analyst at Oppenheimer & Co. in New York, said in a note yesterday.

The company is working on an official statement with its legal counsel, Linda Bergkamp, who is responsible for investor relations at Perfect World, said in an e-mail response to Bloomberg News.

China Telecom Corp. (CHA), the nation’s third-largest wireless carrier, fell 2.5 percent to $55 on concern the company may need to pay more subsidies to win users after China Unicom (Hong Kong) Ltd. introduces the Apple Inc. iPhone 4S on Jan. 13. China Unicom on Jan. 6 said it would give users a free iPhone 4S if they sign a multiyear service agreement. China Unicom rose 1.3 percent to $21.58.

Focus Media

China Telecom traded in the U.S. at a 1.5 percent premium over its shares in Hong Kong, widening from 0.1 percent on Jan. 6.

Focus Media Holding Ltd. (FMCN), a digital advertising company based in Shanghai, gained 0.4 percent to $18.71. The company said yesterday in a statement its acquisition of a regional distributor was to secure advantageous tax treatment and short- selling firm Muddy Waters LLC’s questioning of the deal contains “false statements, unsupported innuendo and conjecture.”

Focus Media has denied previous accusations from Muddy Waters that it overstated its ad display network and overpaid for acquisitions.

China, the world’s second-largest economy, expanded 9.1 percent in the third quarter from a year earlier, down from 9.5 percent growth in the second quarter and the slowest pace in two years. The government may report Jan. 17 the fourth-quarter growth may have slowed to 8.7 percent, according to the median estimate of 23 economists surveyed by Bloomberg.

To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net

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

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