Baidu Leads Stock Climb on Fed Prospects: China Overnight
Chinese equities traded in the U.S. advanced for a second day, led by Baidu Inc. (BIDU), on prospects further easing in U.S. monetary policy will spur demand for goods from the world’s biggest exporter.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. climbed 1.1 percent to a nine-day high of 105.70 yesterday in New York. Baidu surged to the strongest since Aug. 3 on a report that its online search engine will be included in products running Apple’s iOS operating system. China Petroleum & Chemical Corp. (SNP) rose after saying it will increase crude output to counter refining losses, while Cnooc Ltd. (883) traded at the widest premium over its Hong Kong stock in three weeks.
China’s economy grew at the slowest pace in 10 quarters in the last three months of 2011, as Europe’s debt crisis and a lackluster U.S. recovery subdued demand for exports. Federal Reserve Chairman Ben S. Bernanke said yesterday that accommodative monetary policy is still needed to spur jobs, stoking a rally in global stocks.
“China will benefit from its exports to the U.S. as demand in the U.S. likely increases if the expectations continue for the Fed to highlight its accommodative steps,” said Michael A. Gayed, chief investment strategist in New York at Pension Partners LLC, which advises on more than $150 million in assets. “Any kind of feeling of further monetary stimulus is just more of a reason for money to come out of bonds and into riskier assets like equities.”
China ETF Gains
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose the most in two weeks, gaining 1.1 percent to $37.31. The Standard & Poor’s 500 Index (SPX) jumped 1.4 percent to 1,416.51, the highest close since May 2008.
Beijing-based Baidu, owner of the biggest search engine in China, surged 4.5 percent to a seven-month high of $150.80.
The company’s search engine will be included in the iOS operating system used in Apple’s iPhones and iPads in China from next month, Sina.com reported, citing people it didn’t identify. Baidu spokesman Kaiser Kuo and Apple’s spokeswoman Trudy Muller declined to comment on the report when contacted.
“It’s certainly a positive for the shares since it appears that Baidu is going to be the default search engine for Apple products sold in China,” said Qi Guo, an analyst at ThinkEquity LLC in San Francisco. “I’m not surprised by Apple’s decision, since Baidu’s search engine is the No. 1 choice for China, no question about that.”
Guo has a buy rating on Baidu with a 12-month price target of $200.
The Shanghai Composite Index (SHCOMP) added 0.1 percent to 2,350.60 yesterday, snapping a two-day slump. The Hang Seng China Enterprises Index (HSCEI) for Chinese companies traded in Hong Kong declined for the ninth day, the longest losing streak since July 5, 2010. The measure has gained 6.6 percent this year.
American depositary receipts of China Petroleum, Asia’s largest refiner and China’s second-biggest oil producer, known as Sinopec, gained 1.9 percent to a one-week high of $113.38 in New York.
Sinopec plans to boost oil production in western China and increase exploration for unconventional resources including gas from shale formations, the company said yesterday in a statement as fourth-quarter profit dropped 23 percent, below the mean analyst estimate.
The Beijing-based company plans to increase crude output to 326.5 million barrels in 2012 and boost gas production to 582.6 billion cubic feet this year, according to the statement.
Cnooc, the biggest offshore oil explorer in China, advanced 1.1 percent to $214.68 in New York yesterday. ADRs of Cnooc, each representing 100 common shares in the company, traded 1.2 percent above its Hong Kong stock, the widest premium since March 1.
Based in Beijing, Cnooc is scheduled to report its 2011 financial results tomorrow. Profit probably gained 26 percent from 2010 to 1.54 yuan ($0.24) per share, according to the average estimate of 21 analysts compiled by Bloomberg.
Crude oil for May delivery rose 0.1 percent to $107.03 a barrel on the New York Mercantile Exchange. Prices have risen 8.3 percent this year.
Vipshop Holdings Ltd. (VIPS), a Chinese online discount retailer, dropped on its second day of trading after an initial public offering on March 23 where it raised 39 percent less than targeted. The Guangzhou-based company sank 15 percent to $4.70 yesterday, after selling ADRs at $6.50 apiece in the IPO.
The China Securities Regulatory Commission plans to raise the quota for qualified foreign institutional investors to invest in domestic capital markets and will broaden the scope for their investments, Vice Chairman Yao Gang said at a forum hosted by Caixin media group March 25.
The plan is intended to attract more overseas funds into the domestic markets and the CSRC also plans to lower the threshold for Hong Kong listings and encourage financial institutions to set up overseas branches, Yao said.
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