Sina Surges as Easing Bets Trigger ADR Advance: China Overnight
Chinese stocks traded in New York gained and Sina Corp. (SINA) rose to a six-week high on prospects the slowest industrial output growth in three years will prompt the government to take further easing steps to boost the economy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. rallied 0.7 percent to 91.49 yesterday in New York. Social media company Sina jumped to the highest since June 22 while Phoenix New Media Ltd. (FENG), an Internet, TV and mobile-news provider, surged the most in seven weeks. Semiconductor Manufacturing International Corp. (SMI), a circuit-chip maker, soared to a two-month high after HSBC Holdings Plc recommended buying the shares.
China’s statistics bureau said yesterday that factory production increased 9.2 percent in July from a year earlier, less than the estimate by all 32 economists surveyed by Bloomberg News. Inflation cooled for a fourth month and producer prices fell for a fifth month, the bureau’s separate reports showed. The People’s Bank of China has cut interest rates twice since early June.
“‘We expect to see at least one more interest rate cut this year,’’ Charlie Awdry, a portfolio manager of Henderson Global Investors’ $800 million China Opportunities Fund, said by phone from London yesterday. ‘‘That will benefit the banks, which will help take equities up.’’
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose 0.1 percent to $35.29, the strongest level in almost three months. The Standard & Poor’s 500 Index of the biggest U.S. shares was little changed at 1,402.80 as data showing an unexpected decline in U.S. jobless claims last week tempered concern about a worsening of Europe’s economy.
Barclays Plc reduced yesterday its forecast for China’s growth in 2012 to 7.9 percent from 8.1 percent, after July industrial output growth fell to the slowest pace since May 2009. Consumer prices in China rose 1.8 percent in July from a year earlier, the lowest since January 2010. The world’s second- largest economy expanded 7.6 percent in the April-June period, the least in three years.
Sina, which provides the Twitter-like Weibo service in China, surged 5.8 percent to $52.51, the highest level since June 22. The company is due to report second-quarter results on Aug. 15 after U.S. markets close.
The company, which had 324 million users for its Weibo social networking platform by the end of March, will probably report a second-quarter loss of $3.9 million, compared with a profit of $10 a year earlier, according to the average estimate of 11 analysts in a Bloomberg survey.
‘‘The Street is expecting bad earnings numbers but we may get a bounce from Q3 guidance of better-than-expected Weibo monetization,” Adam Krejcik, an analyst at Roth Capital said in by phone from Newport Beach, California. “Things won’t get much worse for online advertising or for China’s economy, and Sina may already have hit its low for the year.”
American depositary receipts of SMI, as the Shanghai-based chipmaker is known, jumped 6.6 percent to a two-month high of $1.94.
HSBC raised its recommendation on the stock to overweight from neutral. SMI is headed toward “sustained profitability” due in part to demand from customers such as Broadcom Corp. (BRCM) and Qualcomm Inc. (QCOM), Steven Pelayo, a Hong Kong-based analyst at HSBC wrote in an e-mailed research note yesterday.
SMI’s second-quarter sales rose 27 percent from the prior three months and 20 percent from a year earlier to $421.8 million, it said in a Aug. 8 statement. Net income was $7.1 million for the quarter, from a loss of $42.8 million the previous period. Gross margin also doubled to 24 percent from the previous quarter, it said.
Beijing-based Phoenix climbed 5.7 percent to $3.88, the steepest gain since June 15. The media company is scheduled to announce second-quarter results on Aug. 13.
Elong, China’s second-largest online travel agency whose biggest shareholder is Expedia Inc. (EXPE), increased 3.6 percent to a two-month high of $13.66 in New York.
The Shanghai Composite Index (SHCOMP) climbed 0.6 percent yesterday to a three-week high of 2,174.10, while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong advanced 1 percent to 9,962.17, the highest since May 15.
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