Chinese equities in the U.S. climbed for the first time in four days, led by Sina Corp. (SINA), as data showing American employers boosted hiring last month enhanced the outlook for the world’s largest exporter.
The Bloomberg China-US 55 index of the most-traded Chinese stocks in the U.S. added 0.7 percent to 104.85 yesterday in New York, the biggest daily gain this month. Sina, which runs a Twitter-like service in China, rose the most in a week, leading gains in major Internet companies.
Nanjing-based drugmaker Simcere Pharmaceutical Group (SCR) jumped the most in a month after reporting 2011 profit beat analysts’ forecasts. Mobile-phone chip designer Spreadtrum Communications Inc. (SPRD) advanced to a one-week high while China Unicom (Hong Kong) Ltd. rose in New York to trade at the highest premium over its Hong Kong stock since Jan. 18.
Evidence U.S. companies are employing more workers is bolstering prospects consumer spending will rise, a positive sign for China which has seen export growth decline amid the European debt crisis. Chinese Commerce Minister Chen Deming said yesterday that “arduous efforts” will be needed to meet the nation’s goal of increasing trade by 10 percent this year.
“We are optimistic about U.S. growth, which has a significant impact on Chinese growth,” said Gabriel Wallach, who manages $2.5 billion in emerging-market equities, including Chinese stocks, at BNP Paribas Investment Partners in Boston. China’s economic growth may exceed the government target of 7.5 percent set this week, instead expanding “8 to 8.5 percent this year,” he said, adding “the government’s target is based on the current economic situation, particularly slightly weaker exports.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced for the first time in four days, adding 0.5 percent to $37.92 yesterday. The Standard & Poor’s 500 Index (SPX) was up 0.7 percent to 1,352.63, after slumping 1.5 percent on March 6.
Shanghai-based Sina, which also owns the third-most visited website in China, surged 7.1 percent to $72.60, the most since Feb. 28, after losing 9 percent over the previous two days.
Youku Inc. (YOKU), owner of the largest video-sharing website in China, increased 4.4 percent to $25.01 in New York, extending its gain this year to 60 percent. Competitor Tudou Holdings Ltd. advanced 3.1 percent to $12.37, snapping a four-day slump.
Wallach said he favors Chinese companies in the technology, energy and consumer sectors. “We like some Internet and semiconductor names as we are seeing a very strong year-on-year recovery in earnings,” he said.
Spreadtrum, a Shanghai-based mobile chip designer, rallied 7 percent, the most since Feb. 28, to $14.89. The company is trading at 6.6 times estimated earnings this year, which is below the average multiple of 19 for the Bloomberg China-US 55 Index and also compared with 23 for its competitor MediaTek Inc., a Taiwan semiconductor designer.
Short seller Carson Block -- whose reports on Chinese timber company Sino-Forest Corp. led to the stock being halted from Canadian trading -- raised concerns about Spreadtrum’s financial reporting in June, and questioned why Chief Executive Officer Ping Wu and Chief Financial Officer Richard Wei left the company months before it reported a 137 percent revenue growth in the third quarter of 2009 over the previous quarter.
Spreadtrum shares have climbed 19 percent in New York since the June 28 Block report.
American depositary receipts of Simcere added 4.8 percent to $8.68, the biggest one-day gain since Jan. 30. The stock earlier rose as much as 19 percent, the largest intraday advance since November 2008. Each ADR represents two common shares.
Simcere, based in China’s eastern Jiangsu province, said net income rose 3.5 percent last year to 178.4 million yuan ($28.3 million), the company said in a statement yesterday before U.S. markets opened. That exceeded the 142.4 million-yuan average forecast of six analysts (762), according to data compiled by Bloomberg.
Goldman Sachs Group Inc. analyst Du Wei reiterated a “neutral/neutral” rating on Simcere on March 6, while raising the price target for the ADRs to $8.30 from $7.50. Seven out of 10 analysts rated the company “hold” and two gave it a “buy” recommendation, according to data compiled by Bloomberg.
ADRs of China Unicom, the nation’s second-largest wireless network operator, added 3.6 percent, the most in a month, to $18.06. The ADRs, each representing 10 common shares, traded 1.2 percent above China Unicom’s Hong Kong stock, the most since Jan. 18. The Hong Kong-based company gained 2.7 percent to HK$13.86 yesterday, the equivalent of $1.79 per share.
Analysts at Nomura International Hong Kong Ltd. reiterated their “buy” recommendation on China Unicom while Barclays Capital Inc. maintained a rating of “underweight/neutral” yesterday.
Wealth manager Noah Holdings Ltd. (NOAH) jumped 8.3 percent to $8 in U.S. trading yesterday, the most since Feb. 22. The Shanghai- based company said on Feb. 22 it got a license from regulators to distribute mutual funds in China and announced on Feb. 28 its first dividend payment since an initial public offering in November 2010.
The Chinese government is scheduled to report inflation data for February tomorrow. Consumer prices probably rose 3.4 percent from a year earlier, from 4.5 percent in January, according to the median estimate of 35 economists in a Bloomberg survey. China has an annual inflation target of 4 percent for 2012, Premier Wen Jiabao said March 5.
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