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Solars Lead Weekly ADR Slump Before PMI Report: China Overnight

Chinese equities traded in New York fell, sending the benchmark index to the biggest five-day loss in six weeks as economists expected the government to report industrial output growth slowed for a fourth month in August.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. declined 0.2 percent to 87.95 in New York. The gauge retreated 2 percent this week, paring its monthly gain to 1.4 percent, the most since February. Yingli Green Energy Holding Co. (YGE) and Suntech Power Holdings Co. (STP) tumbled for the week after cutting shipment forecasts for 2012. China Southern Airlines Co. (ZNH) posted a weekly drop after the carrier said first-half profit sank 85 percent.

An official Purchasing Managers’ Index, due today at 9:00 a.m. from the statistics bureau, may fall to 50 from 50.1 in July, according to the median estimate of 25 economists surveyed by Bloomberg. Fifty marks the dividing line between expansion and contraction. Forty-nine companies in the Bloomberg gauge releasing earnings since mid-July have missed analysts’ estimates by an average 8.8 percent, compared with 3 percent above projections a year ago, according to data compiled by Bloomberg.

“Equity investors are waiting to see that the Chinese government is doing something to support the economy,” Charlie Awdry, a portfolio manager at Henderson Global Investor’s $800 million China Opportunities Fund (GAHKCHA), said by phone yesterday from London. “The cycle of the economy is bouncing somewhere near the bottom. Managements at Chinese manufacturing and industrial companies are saying generally it’s pretty tough.”

China ETF Rises

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., climbed 0.4 percent yesterday to $33.07, trimming its loss this week to 2.8 percent. The Standard & Poor’s 500 Index of the biggest U.S. shares added 0.5 percent to 1,406.58, as Federal Reserve Chairman Ben S. Bernanke said he wouldn’t rule out more steps to lower a jobless rate he described as a “grave concern.”

Yingli, the world’s sixth-largest silicon-based solar module maker, and Suntech, the world’s largest, declined 12 percent. Prices for solar panels fell 36 percent industrywide in the past year as demand slowed, according to data compiled by Bloomberg.

China Southern lost 7.1 percent this week, its worst loss since June 15. The Guangzhou-based airline’s net income fell 85 percent to 424 million yuan ($67 million) under international accounting standards because of an economic slowdown sapping travel demand and higher fuel costs.

Manufacturing

A preliminary reading for a purchasing managers’ index released Aug. 23 by HSBC Holdings Plc and Markit Economics suggests China’s August manufacturing may be contracting for a 10th month. Chinese Central Bank Governor Zhou Xiaochuan said Aug. 22 that adjustments to interest rates and lenders’ reserve requirements are still possible.

Fed Chairman Bernanke, in a speech in Jackson Hole, Wyoming said more bond purchases are an option as the central banker considers further steps to stimulate growth and address U.S. unemployment of more 8 percent.

Shanda Games Ltd. (GAME), China’s third-biggest online games operator, jumped 6.9 percent to $3.89 to extend its weekly gain to 17 percent, its best since going public in New York in September 2009. Shanda Games replaced its chairman and chief executive on Aug 26 as Qunzhao Tan resigned. The position of CEO was filled by Chief Operating Officer Xiangdong Zhang.

“Investors appear to like the management changes, and think that this may even be an opportunity for the company to be taken private,” Atul Bagga of Lazard Capital Markets said in a phone interview from San Francisco. Shanda Games dropped 15 percent this year through Aug. 24.

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: Tal Barak Harif at tbarak@bloomberg.net

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