ETF Rises to One-Week High on Easing Prospects: China Overnight

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose to a one-week high as China Mobile Ltd. (CHL) and Cnooc Ltd. (883) jumped on speculation of more monetary easing.

The ETF added 1.3 percent to $40.32 yesterday in New York, the strongest close since Feb. 8, as the Bloomberg China-US 55 Index of Chinese equities traded in the U.S. gained 1.5 percent to a six-month high of 109.09. Wireless network operator China Mobile rose to the highest in three months while offshore oil explorer Cnooc climbed to a seven-month peak. Sina Corp. (SINA) and Baidu Inc. (BIDU) gained as Apple Inc. said it will add their applications to its Mac operating system for Chinese users.

China may cut banks’ reserve requirements three more times in the first half, after the central bank said this week it is targeting greater growth in money supply in 2012, HSBC Holdings Plc economists said in a report e-mailed yesterday. U.S. jobless claims unexpectedly slipped to the lowest level in four years last week, boosting the outlook for world demand.

“The global economy isn’t as bad as some people had feared, which is good for China and Chinese companies,” Jeff Papp, a senior analyst in Lisle, Illinois, at Oberweis Asset Management Inc., which manages $700 million including Chinese stocks, said by phone yesterday. “Most people still expect China’s central bank will do more easing as the government has shifted to a more accommodative mode in supporting growth.”

The People’s Bank of China, which lowered banks’ reserve- requirement ratios for the first time since 2008 in December, hasn’t altered the nation’s 6.56 percent lending rate since July.

Cnooc, PetroChina

Beijing-based Cnooc’s American depositary receipts gained 2.5 percent to $232.60, the highest level since July 19, extending their advance this year to 33 percent. ADRs of PetroChina Co. (PTR), the nation’s biggest oil producer, climbed 1.4 percent to $150.83, taking this year’s increase to 21 percent.

Oil for March delivery rose 0.5 percent to settle at a six- week high of $102.31 per barrel yesterday on the New York Mercantile Exchange. Prices have added 3.5 percent this year.

The Standard & Poor’s 500 Index rose 1.1 percent to 1,358.04 after the better-than-estimated U.S. jobs data and amid speculation that Greece will receive a second bailout. The Shanghai Composite Index (SHCOMP) slid 0.4 percent to 2,356.86, trimming the measure’s advance this year to 7.2 percent.

ADRs of China Life Insurance Co. (LFC), the country’s biggest insurer, advanced for the second day, rising 1.4 percent to a one-week high of $44.93. Each ADR represents 15 common shares. The company’s premium income in January was 49.1 billion yuan ($7.8 billion), up from 43.9 billion yuan a year ago, according to its regulatory filing to the Hong Kong Stock Exchange yesterday. The ADRs traded 1.9 percent higher than stock in Hong Kong, the biggest premium since Feb. 3.

China Mobile

Beijing-based China Mobile rose 1.6 percent to $52.80 in New York, the strongest level since Nov. 8.

Foreign direct investment in China fell for the third month in January, declining 0.3 percent from a year earlier to $9.997 billion, Commerce Ministry data showed yesterday. Less foreign capital coming into China will allow greater room for China to ease credit controls, Papp at Oberweis said.

The nation’s inflation rate unexpectedly jumped to 4.5 percent in January, rising for the first time in six months, as prices climbed ahead of the Chinese New Year holiday, according to statistics bureau data released on Feb. 9.

Sina, Baidu

Sina, a Shanghai-based company that provides a Twitter-like Weibo service in China, gained 3.5 percent to $68.69 in the U.S.

Beijing-based Baidu (BIDU), the country’s biggest online search engine, climbed 2.5 percent to $141.83, the highest level since Nov. 8. Net income for the fourth-quarter jumped 77 percent from a year earlier to 2.05 billion yuan ($326.3 million), Baidu said in a statement after trading closed yesterday. That beat the average estimate of $1.99 billion of 10 analysts surveyed by Bloomberg.

Apple will release an upgrade to its Mac operating system later this year, adding new features for Chinese users, Phil Schiller, the company’s senior vice president of product marketing said in an interview yesterday. The system will include built-in options to use Baidu’s search engine and Sina’s Weibo service as well as the video sites of Youku Inc. and Tudou Holdings Ltd.

China, the world’s second-largest economy, expanded 8.9 percent in the three months ended Dec. 31, from 9.1 percent in the previous quarter, the statistics bureau said on Jan. 17.

The Chinese government may set its lowest annual growth target in eight years as authorities place less emphasis on the pace of expansion and focus their efforts on economic rebalancing, Fan Jianping, chief economist at the government-run State Information Center, said in an interview yesterday.

Premier Wen Jiabao may announce a 7 percent or 7.5 percent target for economic growth this year at the annual National People’s Congress meetings that convene in March, Fan said. The last time China set a growth target below 8 percent was in 2004, when the goal was 7 percent.

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

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

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