AsiaInfo Surges as ADRs Rally for Second Week: China Overnight
AsiaInfo-Linkage Inc. (ASIA) and E-Commerce China Dangdang Inc. (DANG) sent Chinese stocks traded in the U.S. for the steepest two-week rally since February on bets the nation will join counterparts in taking steps to spur growth.
The Bloomberg China-US Equity Index of the most-traded Chinese companies gained 1.3 percent last week, extending a 3.5 percent surge in the five days ended June 8. AsiaInfo surged the most since January after Reuters said the software company may be acquired. E-Commerce jumped 21 percent for the week after announcing a deal with Tencent Holdings Ltd. (700) China Southern Airlines Co. traded at a record discount to the Hong Kong stock after Credit Suisse Group AG downgraded the shares.
China cut benchmark interest rates last week for the first time since 2008 as the May inflation rate fell to the slowest pace since June 2010. Government data showed last week foreign direct investment in China was almost unchanged at $9.23 billion last month from a year earlier, as the economy cooled and the yuan weakened. Global equities rallied on speculation central banks will act to boost economies before Greek elections during the weekend.
“I’m very optimistic about Chinese stocks on the outlook that its economic growth will stabilize,” Eric Brock, who helps manage $3.8 billion as a portfolio manager at Clough Capital Partners in Boston, said by phone on June 15. “There should be more cuts in the ratio over the next few months as a part of an overall package of policy relaxation.”
$1 Billion Deal
The Bloomberg China gauge advanced 1.6 percent on June 15 to 91.42, the highest level since May 29. The iShares FTSE China 25 Index Fund, the biggest U.S.-listed China exchange-traded fund, jumped 2.1 percent on June 15 to a one-month high of $34.39, completing its third weekly advance. The Shanghai Composite Index of mainland stocks rose 0.5 percent to 2,306.85, ending the week up 1.1 percent. The Standard & Poor’s 500 Index added 1 percent to 1,342.84, pushing its weekly gain to 1.3 percent.
AsiaInfo rose 21 percent to $12.79 in New York last week, the sharpest gain in more than four months.
The Beijing-based company, which sells telecommunications software to China’s biggest wireless carriers, may become the target of an acquisition by private-equity investors including Silverlake, TPG Capital and Primavera Capital, Reuters reported, citing people familiar with the deal. The deal valued at more than $1 billion, it said.
Jimmy Xia, the company’s investor relations director, didn’t immediately return a phone call and e-mailed request made after hours seeking comment on the news report. Phone messages left at the company’s office in Santa Clara, California, were also not immediately returned.
E-Commerce, the country’s biggest Internet book retailer known as Dangdang, jumped 14 percent on June 15, the most since Jan. 27. It’s surged 21 percent for the week and 34 percent for the month.
The company has reached an agreement with Tencent Holdings, China’s biggest Internet company, to run book and baby products sales in its online store, the Chinese-language National Business Daily reported June 13, citing unidentified people at both companies. Tencent plans to invest $1 billion in its e- commerce unit, it said in a May 24 statement.
China’s economy, the world’s second-largest, expanded 8.1 percent in the first three months this year, the slowest pace in 11 quarters. Inflation eased to 3 percent in May from 3.4 percent in April, the slowest reading since June 2010.
‘Impact of Easing’
The Asian nation boosted its holdings of U.S. government securities in April for the first time in three months to $1.1455 trillion, U.S. Treasury Department data released June 15 showed.
“Typically, when you start to see signs of easing, they continue for a while,” Timothy Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York, which manages about $2 billion in assets, said by phone on June 15. “There’s a lag between easing attempts and the impact of that easing on the economy.”
Suntech Power Holdings Co., the world’s largest solar-panel maker, advanced 14 percent for the week to $1.84. Trina Solar Ltd. (TSL), the world’s fourth-largest, rose 9.1 percent at the end of last week to $6.59.
Jerry Stokes, Suntech’s European unit president, said in a June 14 interview that Germany may install between six and seven gigawatts of solar devices this year. Chancellor Angela Merkel’s government wants to reduce the pace of annual installations by about half after new projects peaked at 7.5 gigawatts last year.
China Eastern Cut
Trina Chief Executive Officer Jifan Gao said in a separate interview on the same day that “it’s possible” the market in Germany will reach that level.
LDK Solar Co., the world’s second-largest maker of wafers, surged 8 percent to $2.17 in its second day of gains. Yingli Green Energy Holding Co., the sixth-largest silicon-based solar module producer, climbed 9.2 percent to $2.84.
American depositary receipts of China Southern, Asia’s biggest air carrier by passengers, sank 7.1 percent to $20.20 to trade 7.3 percent lower than its Hong Kong stock.
Davin Chunpong Wu, an analyst at Credit Suisse, cut his recommendations on China Southern to underperform from outperform on June 15.
Cnooc Ltd. (883), China’s biggest offshore oil explorer, increased 4.6 percent to a one-month high of $198.27 in U.S. trading. The ADRs, each representing 100 underlying shares in the company, traded 1.2 percent above its Hong Kong stock, the highest premium in three days.
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