LDK Solar Co. led a drop in Chinese solar stocks in New York after a French materials supplier said the companies are reducing orders and Citigroup Inc. signaled Germany may cut industry subsidies by at least 20 percent.
LDK, a solar-panel maker based in China’s south-central Jiangxi province, sank the most in four months, while solar-module manufacturer Yingli Green Energy Holding Co. (YGE) slid the most since Jan. 19. The Bloomberg China-US 55 Index of the most-traded Chinese shares in the U.S. fell 0.2 percent to 106.54 yesterday in New York, retreating from a five-month high.
Chinese solar companies are cutting back on orders and asking to delay bill payments, Thomas Baumgertner, chief financial officer of Paris-based graphite supplier Mersen, said in an interview yesterday. Germany, the world’s biggest solar market, will probably reduce so-called feed-in tariffs, the rate paid to owners of solar installations in the country, by at least 20 percent from April, Citigroup analysts led by Timothy Arcuri wrote in a report e-mailed yesterday.
“Germany’s tariff cut may come earlier than expected and be deeper than expected, which damps investor optimism that has helped bolster solar stocks,” Arcuri said by phone yesterday. “Chinese solar companies may not see real earnings as the solar pricing pressure remains.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., was little changed at $39.39, after gaining 1.3 percent on Feb. 13. Casino operator Melco Crown Entertainment Ltd. (MPEL) traded at a 2.4 percent discount to its shares in Hong Kong.
American depositary receipts of LDK Solar sank 12 percent, the most since Oct. 3, to $5.55 in New York. ADRs of Yingli, based in Baoding in northern China, dropped 10 percent to a one-week low of $4.75. The stock surged 23 percent last week and LDK is up 33 percent this year.
Trina Solar Ltd. (TSL), China’s fifth-largest solar-panel supplier, fell 8.9 percent to $9.36, the biggest drop in four weeks. Suntech Power Holdings Co., the world’s largest solar-panel maker, slumped 8.3 percent, also the biggest decline in four weeks, to $3.44.
Chinese solar makers “used to pay almost on delivery or within 30 days, they can now pay within three to six months with bank guarantees,” Mersen CFO Baumgartner said in an interview in Paris yesterday.
Hari Chandra Polavarapu, an analyst who covers the Chinese solar industry at Auriga USA LLC in New York, downgraded ratings for Yingli and Trina to “hold” from “buy” yesterday. The Bloomberg Global Leaders Solar Index dropped 4.9 percent, the most in two months.
AsiaInfo-Linkage Inc., whose largest customers are China’s biggest wireless carriers, declined 1.4 percent to a one-week low of $11.59 after saying that gross margin in the fourth quarter shrank from a year ago. Its shares tumbled as much as 8.3 percent earlier in the New York day.
The Beijing-based company forecast first-quarter sales of between $119 million and $121 million on Feb. 13, compared with the $123.5 million average estimate of four analysts surveyed by Bloomberg.
Melco Crown’s ADRs, each representing three common shares in the company, declined 1.7 percent to $11.82 in New York trading, while its shares in Hong Kong gained 4.2 percent to HK$31.30, the equivalent of $4.04 per share. The ADRs traded at a 3.5 percent premium over the Hong Kong stock on Feb. 13.
Qihoo 360 Technology Co. (QIHU), a computer security software developer based in Beijing, advanced 4.8 percent to $16.98, the most in two weeks. Yale University reported holding shares of Qihoo stocks in the fourth quarter, along with positions in the iShares FTSE China ETF, according to a filing with the U.S. Securities and Exchange Commission yesterday.
China’s securities regulator is reviewing an application from E Fund Management Co. in China to start mainland China’s first exchange-traded fund tracking the Hong Kong-listed shares of Chinese companies, according to data posted on the website of the China Securities Regulatory Commission.
An exchange-traded fund linked to Hong Kong stocks was part of a range of measures unveiled by Vice Premier Li Keqiang on Aug. 17 to boost cross-border investment between the mainland and the former British colony.
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