Chinese equities listed in New York posted their biggest daily jump in three months, buoyed by social media stocks, on signs looser monetary policy is already bolstering lending in the world’s second-largest economy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. climbed 2.5 percent to 103.76 yesterday in New York, the steepest gain since Jan. 10. Social network operator Renren Inc. (RENN) surged a five-month high while Sina Corp. (SINA), which runs a Chinese Twitter-like service, gained the most in a month as the prospect of an initial public offering by Facebook Inc. draws investors to companies in the same sector.
Chinese lenders added 1.01 trillion yuan ($160.1 billion) of new loans in March, the most since January 2011 and more than all 28 analysts surveyed by Bloomberg estimated, central bank data yesterday showed. The People’s Bank of China has lowered the amount major banks must set aside as reserves twice since November to spur lending as a global slowdown looms. Policy makers also doubled the amount foreigners are allowed to invest in China’s capital markets on April 4 to lure more investment.
“There seems to be more liquidity coming into the system from things like more Chinese bank lending, and other measures they took recently,” Dave Lutz, head of exchange-traded fund trading and strategy at Stifel Nicolaus & Co. in Baltimore, said by phone yesterday. The increase in lending “is a piece of the puzzle, and the puzzle right now is acting like they’re easing. That’s typically very good for the stocks.”
Official data due today will show China’s economy expanded 8.4 percent in the first quarter, the slowest pace of growth since 2009, the median forecast of 41 economists surveyed by Bloomberg showed. The government cut this year’s growth target last month to 7.5 percent, after keeping it at 8 percent over the previous seven years.
The IShares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., surged 3.6 percent to $37.45, the biggest one-day rally since December. The Standard & Poor’s 500 Index (SPX) rose 1.4 percent to 1,387.57, after Federal Reserve Vice Chairman Janet Yellen and New York Fed President William C. Dudley endorsed the central bank’s position that borrowing costs will probably stay low through 2014. The two-day increase in the gauge was the biggest this year.
Renren, a Beijing-based real-name social-network operator, surged 11 percent to $6.86 yesterday, the highest level since October. Sina (SINA), which owns Weibo, a Twitter-like service in China, climbed 6.4 percent to $65.23, the largest one-day advance since March 7.
Menlo Park, California-based Facebook, the world’s biggest social-networking service, filed on Feb. 1 to raise $5 billion in the largest IPO on record by an Internet company. The company’s prospective IPO is helping to attract investors’ attention to Chinese social media companies like Sina, according to Tim Cunningham, who helps oversee $83 billion, including Chinese stocks, at Thornburg Investment Management Inc. in Santa Fe, New Mexico.
“When people get excited about Facebook coming to the market, they do look around at the world and see similar companies,” Cunningham said.
Baidu Inc. (BIDU), the largest online search engine in China, added 3.5 percent to an eight-month high of $151.32. Chu Dachen, the general manager of Baidu’s advertising partners network, has left the Beijing-based company and will join Sina’s Weibo microblogging product team, a news report on NetEase Inc.’s website said on April 11, citing people it didn’t identify.
Baidu’s investor manager and Cathy Peng, Sina’s spokeswoman, couldn’t be reached by phone after business hours in China.
Rovio Entertainment Oy, creator of the “Angry Birds” mobile-phone game, said it’s in talks with Chinese companies including Baidu and Sohu.com Inc. (SOHU), owner of the third-largest search engine in China, to work on winning players in the world’s biggest Web market.
The discussions involve possible new methods of Internet distribution in China, Henri Holm, senior vice-president at Rovio Asia, said in an interview yesterday in Hong Kong, where he is based. The Finnish company is also in similar talks with Renren, after starting work with Tencent Holdings Ltd. (700), Sina, Youku Inc. and Qihoo 360 Technology Co., he said. Tencent is China’s biggest Internet company by market value.
The Shanghai Composite Index (SHCOMP) climbed 1.8 percent yesterday to 2,350.86, the biggest advance since Feb. 8. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong added 1.5 percent to 10,664.61, snapping a three-day decline.
Youku (YOKU), the biggest online video operator in China, gained 6.4 percent to $24.01, the steepest increase in a month. Tudou Holdings Ltd. (TUDO), the second largest, jumped 7.9 percent to $33.42. Youku plans to acquire Tudou in a stock swap deal, the companies said in a joint statement on March 12. The purchase is currently worth about $961 million, compared with $925.1 million when the transaction was announced, according to data compiled by Bloomberg.
American depositary receipts of 51job Inc. (JOBS), an online human resources service provider, jumped 4.6 percent, the biggest gain in more than a week, to $59.39.
All four analysts who rate the Shanghai-based company recommend it as a buy, according to data compiled by Bloomberg.
Aluminum Corp. of China rose and posted the widest premium in three months to its Hong Kong stock. ADRs of Chalco, as China’s biggest producer of the light metal is known, soared 5.1 percent to $12.34 in New York, the highest level since Jan. 17. The ADRs, each representing 25 common shares in the company, traded 3.9 percent above its Hong Kong shares, which climbed 1.7 percent to HK$3.69, the equivalent of 48 U.S. cents. The premium was the highest since Dec. 20.
China’s gross domestic product expanded 8.9 percent in the last three months of 2011, the slowest pace for 10 quarters.
“People are chattering that the GDP numbers are going to be better than expected, and some are expecting more stimulus,” said Cunningham at Thornburg Investment.
The country hasn’t moved benchmark interest rates since boosting them to the highest level since 2008 in July.
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