Stimulus Doubts Sink ADRs as PetroChina Tumbles: China Overnight
Chinese energy producers fell in New York, sending the benchmark index to its longest losing streak in two months, after central banks from China, Europe and the U.S. failed to deliver new stimulus to bolster growth.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. retreated for a fourth day, losing 0.8 percent to 85.67 yesterday in New York. PetroChina Co. (PTR), the nation’s largest oil explorer, sank the most in six weeks and Yanzhou Coal Mining Co. (YZC), the country’s fourth-largest producer of the fuel, retreated from a one-month high. Container ship operator Seaspan Corp. (SSW) climbed to a three-week high as second- quarter adjusted profit beat analysts’ estimates.
The People’s Bank of China said yesterday it will keep pursuing “prudent” monetary policy, reiterating the government’s focus on stemming a slowdown without implementing a stimulus comparable to that in late 2008. European Central Bank President Mario Draghi said yesterday the ECB will join forces with governments to buy sovereign bonds, after keeping the benchmark interest rate on hold. The U.S. Federal Reserve refrained this week from adding stimulus to the economy.
“There’s disappointment that there’s no white knight on the horizon to save the world economy, therefore Chinese cyclicals tied to domestic or global growth are going down,” Nicholas Field, who helps oversee $23 billion of emerging market assets at Schroders Plc (SDR), said in a phone interview from London yesterday. “There’s been a slow reduction in expectations for Chinese policy over this year.”
China ETF Drops
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., slid 1 percent to $33.96, snapping a two-day increase. The Standard & Poor’s 500 Index of the biggest U.S. shares declined for a fourth day, losing 0.7 percent to 1,365.
China cut interest rates in June and July, the first reductions since 2008, and is encouraging local governments to boost investment as economists forecast 2012 growth will be the slowest in 13 years. The country’s Ministry of Railways said on July 31 that it plans to spend 470 billion yuan ($74 billion) on railroads and bridges this year, less than the 601 billion yuan directed toward the sector in 2009. Authorities enacted a 4 trillion yuan stimulus program during the global financial crisis.
Draghi said the central bank may “undertake outright open market operations of a size adequate to reach its objective.” Commodities and oil fell.
Expectations ‘Too High’
“Markets are struggling to interpret what Draghi’s comments mean for economic growth,” Joseph Tanious, a strategist at JPMorgan Funds, who helps oversee $394 billion, said by phone from New York yesterday. “Expectations for the ECB may have been too high.”
PetroChina’s American depositary receipts dropped 2.9 percent to 121.98, the steepest decline since June 21, as crude traded in New York fell 2 percent to $87.13 a barrel on the New York Mercantile Exchange. The ADRs, each representing 100 ordinary shares, traded 1.5 perent below its Hong Kong stock, the widest discount in six weeks.
Yanzhou Coal declined 2.8 percent to $15.35, extending its loss for 2012 to 28 percent. Coal prices in China haven’t reached a bottom, Sanford C. Bernstein & Co. said in an e-mailed research note yesterday.
China’s benchmark price for power-station coal fell for a 12th week to the lowest level since 2009 as electricity demand slowed and hydropower output increased. Coal with an energy value of 5,500 kilocalories per kilogram at the Chinese port of Qinhuangdao dropped to a range of 620 yuan to 635 yuan a metric ton as of July 30, according to the China Coal Transport and Distribution Association.
Yingli Green Energy Holding Co. (YGE), the world’s sixth-largest silicon-based solar module producer, lost 5.5 percent to a record low of $1.55. Daiwa Securities Co. analysts cut the price estimate for the stock to $1.4 yesterday from $3.25. Suntech Power Holdings Co. (STP), the world’s biggest solar company, dropped 5.9 percent to 95 cents, tumbling for a fourth day. Trina Solar Ltd. (TSL) sank 6.8 percent to $4.28, the lowest level since March 2009.
Hong Kong-based Seaspan added 1.4 percent to $15.80, extending a six-day rally to 5.7 percent. The company said adjusted net income was 35 cents per share for the quarter ended June 30, from 24 cents a year earlier and compared with a 32- cent average forecast of nine analysts in a Bloomberg survey.
Seaspan also said shareholders elected Harald Ludwig to be a board director in a statement dated Aug. 1. Separately, Deep Water Holdings LLC, based in Montana state, reported it held 22.4 percent of Seaspan ordinary shares in a regulatory filing dated Aug. 1.
China Eastern Airlines Corp. (CEA), the nation’s second-biggest carrier, gained 1.2 percent to $17.27 yesterday in New York.
Andrew Orchard, an analyst at CIMB Securities HK Ltd. began coverage on the stock with an outperform recommendation.
The Shanghai Composite Index (SHCOMP) fell 0.6 percent to 2,111.18 yesterday while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong lost 1 percent, the most in a week, to 9,669.21.
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