Chinese stocks traded in the U.S. jumped for a fifth day, led by Sohu.com Inc. (SOHU), on speculation the government will take further steps to bolster the economy once the annual Congress meeting ends.
The Bloomberg China-US 55 Index (CH55BN) of the most-traded Chinese equities in the U.S. gained 2.1 percent to 106.74 yesterday in New York, the highest level since Sept. 1. Sohu, which runs China’s fifth-most visited website, climbed the most since October after Citron Research named the company as its top pick among Chinese Internet shares. Energy explorer Cnooc Ltd. (883) rose the most in two weeks to trade at the highest premium to its Hong Kong stock since March 1.
With the European debt crisis and lackluster U.S. recovery sapping global demand, the world’s biggest exporter reported on March 10 the largest trade deficit in at least 22 years for February, while new loans, industrial output and retail sales for the month all came in below analysts’ median estimates. The annual meeting of China’s National People’s Congress ends today.
“People are always focused forward and the hope is that they will either lower interest rates or let the currency fluctuate more,” Uri Landesman, who helps oversee more than $1 billion of assets as managing general partner at New York-based hedge fund Platinum Partners LLP, said by phone yesterday. “The next move in the market will very much depend on whether they are going to change the monetary policy out of the Congress meetings.”
The Bloomberg China-US 55 gauge has gained 3.6 percent since March 5, when Premier Wen Jiabao cut this year’s growth target to 7.5 percent from 8 percent in the previous seven years. The index’s five-day rising streak is the longest since Jan. 23.
‘Continue to Rally’
The People’s Bank of China cut the amount lenders must keep in reserve on Feb. 24 for the second time since December, and has kept interest rates on hold since July. Governor Zhou Xiaochuan said China may widen the trading band the yuan is confined to, the official Xinhua News Agency reported on March 5.
“Stocks will continue to rally as long as growth won’t slow too much,” Greg Lesko, who manages $700 million at Deltec Asset Management in New York including investments in Chinese stocks, said in a phone interview yesterday. “China’s cut to the growth target isn’t significant relative to the growth pace in Europe and the U.S.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 2.9 percent to $39.96, the biggest one-day rally in two months.
Tudou Holdings Ltd. (TUDO) extended gains after surging 157 percent to a record on March 12, when bigger competitor Youku Inc. said it would buy the online video sharing website in a $1 billion stock swap deal.
‘Next Big Thing’
Shanghai-based Tudou rose 7.6 percent yesterday to $42.50, the highest level since its initial public offering in the U.S. in August. The shares have soared a total 268 percent over the past five trading days. American depositary receipts of Beijing- based Youku retreated 1.5 percent to $31.38 after jumping 27 percent on March 12.
Sohu, based in Beijing, jumped 8.1 percent, the most since Oct. 27, to $53.62 yesterday, the highest level in five weeks.
Citron Research, which wrote reports questioned several Chinese companies’ financial reporting last year, said the increase in Tudou and Youku stock after the merger announcement signals “the market is valuing video in China as the next big thing,” according to a report on the firm’s website yesterday.
Citron said that Sohu’s online video site attracts users to watch more minutes per page view than its competitors, citing data from December.
The Standard & Poor’s 500 Index (SPX) extended its rally to a fifth day, gaining 1.8 percent to 1,395.95, the strongest level since June 2008.
Qihoo 360 Technology Co. (QIHU), which develops computer software including anti-virus applications, desktops and browsers, added 5.7 percent to reach a six-month high of $23.10.
The Beijing-based company entered into a partnership with Phoenix New Media Ltd., owner of a Chinese news web portal, the companies said in a joint statement on March 12. Qihoo will add New Media’s news content to its desktop and other platforms for personal computers, according to the statement.
Qihoo will also add the computer game “Angry Birds,” made by Rovio Entertainment Oy, to its desktop from March 22, according to a statement on the company’s website.
ADRs of Cnooc, the largest offshore oil explorer in China, added 4.3 percent to $224.50, the biggest daily increase in two months. The ADRs, each representing 100 common shares, traded 1 percent above the company’s Hong Kong stock, the biggest premium since March 1. Cnooc shares gained 2.4 percent to HK$17.24 in Hong Kong, the equivalent of $2.20.
China may raise gasoline and diesel prices this week after the conclusion of the 10-day Congress meeting, following an increase in global crude prices beyond the state-set threshold that triggers adjustments.
Prices may rise by as much as 400 yuan ($63.25) a metric ton, Liao Kaishun, an analyst at C1 Energy, and Yao Daming, head of the oil-product department at the Guangdong Oil & Gas Association, said separately by phone from Guangzhou, China yesterday. The country raised fuel prices by 300 yuan a ton on Feb. 8, the first increase in 10 months.
Suntech Power Holdings Co. (STP), the world’s biggest maker of solar panels, rose before a U.S. Commerce Department ruling on Chinese imports on March 19. Suntech, based in Jiangsu province in eastern China, jumped 8.8 percent to $2.96, the most in eight weeks.
The Commerce Department is scheduled to rule on a claim by Bonn, Germany-based SolarWorld AG’s U.S. unit, Helios Solar Works, and five other solar-panel makers asserting that Chinese competitors receive unfair government support that lets them flood the market with cheap products.
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