Spreadtrum Boosts Index Gains on Chips Shipment: China Overnight

Spreadtrum Communications Inc. (SPRD) jumped to the highest level in more than a week, boosting an index of Chinese stocks traded in the U.S., after announcing plans to ship new types of smartphone chips.

Spreadtrum, a Shanghai-based phone chip designer, climbed for a fourth day, the fifth-biggest gainer on the Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese stocks in the U.S. The gauge climbed 1.6 percent to 103.32 at the close of trading in New York, bringing its advance over the past two days to 2.7 percent, the most since April 12.

Shanghai-based Spreadtrum said yesterday that it will start shipping 1 million new chips in the second quarter for Android and other smartphones. The devices, which allow users to access the Internet and run software as well as make calls, may constitute 30 percent of China’s mobile-phone market this year, from less than 10 percent in the past 12 months, Carl Yeung, chief financial officer of Sky-Mobi Ltd., a mobile applications developer, said in a March interview.

“Spreadtrum’s new products showed it was on schedule to produce chips enabling low-priced smartphones, as the feature phone market is shrinking,” T Michael Walkley, a technology stock analyst at Canaccord Genuity Ltd. in Minneapolis, said by phone yesterday. “People are moving to smartphones. The start of shipment will boost Spreadtrum’s earnings in the second half while some contributions will start from the second quarter.”

Spreadtrum advanced 4.7 percent to $14.79 in U.S. trading, the highest close since April 17. The increase pushed Spreadtrum’s four-day rally to 12 percent.

Geithner Urges China

The IShares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., climbed for a third straight day, adding 0.6 percent to $37.74. The Standard & Poor’s 500 Index (SPX) rose 0.7 percent to 1,399.98, extending a rally to three days after data showed contracts to buy U.S. homes increased more than economists predicted in March.

U.S. Treasury Secretary Timothy F. Geithner called on China to loosen state control of its financial system and to raise the ceiling on deposit interest rates.

“Financial sector reforms are critical to China’s continued growth -- and that growth in turn represents tremendous opportunity for American companies and workers,” Geithner said in remarks prepared for a speech in San Francisco yesterday. “Financial reform in China will help reduce one of the main advantages China’s state-owned enterprises have in competing with U.S. companies.”

Geithner was speaking ahead of his trip to China next week to meet with officials of the world’s second-largest economy. The U.S. will raise longstanding issues from the value of China’s currency to intellectual property protection.

Monetary Policy

Speculation that Chinese policy makers will undertake more easing of monetary policy has been bolstering the nation’s equities, said Michael Gayed, chief investment strategist in New York at Pension Partners LLC, which advises on more than $150 million in assets.

“Markets price on hope and the rumor is that China is going to stimulate to counter slower growth given Brazil and India have already lowered rates,” Gayed said by phone yesterday. “China is the last one to start really actively doing that.”

China Unicom Earnings

China has cut reserve requirements for banks twice since November, though it has kept benchmark rates on hold since July at the highest level since 2008. India reduced its repurchase rate by 50 basis points on April 18, while Brazil’s Selic rate has been decreased six times since August.

China Unicom (Hong Kong) Ltd. (CHU), the nation’s second-largest mobile phone company and the first to offer service contracts for Apple Inc’s iPhones, jumped 5.2 percent to $17.53 in New York, the biggest one-day surge since November.

First-quarter net income at the Beijing-based wireless carrier increased sixfold to 1 billion yuan ($159 million), from a restated 145 million yuan a year earlier, according to a company statement released on April 25. Revenue rose 25 percent to 61.2 billion yuan in the first quarter, from 49 billion yuan, beating the median analyst estimate of 56.8 billion yuan in a Bloomberg survey.

Unicom’s American depositary receipts, each representing 10 common shares, traded 0.5 percent above its Hong Kong stock, the first time it registered a premium in five days. The shares climbed 4 percent yesterday to HK$13.54 in Hong Kong, the equivalent of $1.74 per share.

The Shanghai Composite Index (SHCOMP) slid 0.1 percent to 2,404.70 yesterday, while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong climbed 0.9 percent to 10,911.55.

Dangdang

E-Commerce China Dangdang Inc. (DANG), the nation’s biggest Internet bookseller, added 1.3 percent to $8.34 in New York yesterday. Shares have advanced 90 percent this year.

PetroChina Co. (PTR) gained 3.3 percent to $148.47 as the country’s biggest oil producer reported that first-quarter profit rose after it ramped up oil and gas production. Net income (857) increased 5.8 percent from a year earlier to 39.2 billion yuan, PetroChina reported yesterday, beating the 34.8 billion yuan mean estimate in a Bloomberg survey.

China Petroleum & Chemical Corp. (SNP), known as Sinopec, slipped 0.1 percent to $105.14 as earnings slumped on losses from selling fuels at state-controlled prices.

To contact the reporters on this story: Belinda Cao in New York at lcao4@bloomberg.net; Leon Lazaroff in New York at llazaroff@bloomberg.net

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

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