Chinese stocks traded in New York rose the most in a month, with Internet companies leading gains, after the Federal Reserve said it will buy mortgage securities to bolster growth in the world’s biggest economy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in New York climbed 2.3 percent to 91.97 yesterday, the biggest advance since Aug. 6. E-Commerce China Dangdang Inc. (DANG), known as Dangdang, jumped to the highest in a month after Sina Corp.’s news service reported that its online department store started a division providing phone bill payment services. China Telecom Corp. (CHA) and China Unicom (Hong Kong) Ltd. gained on prospects Apple Inc.’s iPhone 5 will help lure users.
The Fed said yesterday it will expand its holdings of long- term securities with open-ended purchases of $40 billion of mortgage debt a month. It also said it would probably hold the federal funds rate near zero “at least through mid-2015.” China’s central bank issued 28-day reverse-repurchase contracts for the first time in a decade, extending the duration of its fund injections into the banking system.
“The Fed is offering more stimulus, and risk assets, emerging markets, have reacted positively,” Steven Bell, who manages $600 million in assets as principal portfolio manager at the GLC Ltd., said by phone yesterday from London. “The Chinese recovery is under way, and later this year, we expect the Chinese equity market to perform strongly.”
China ETF Gains
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., gained 2.4 percent to a four- week high of $34.58. The Standard & Poor’s 500 Index of the biggest U.S. shares jumped 1.6 percent to 1,459.99, the highest since December 2007.
American depositary receipts of Beijing-based Dangdang jumped 6.5 percent to $5.41, the biggest rally since Aug. 6.
Dangdang started an online platform yesterday providing services including phone bill payment, group purchases and travel reservations, Sina’s news service reported, citing an unidentified head of the division.
Maria Xin, Dangdang’s investor relation manager, couldn’t be reached by phone after normal business hours in Beijing. An e-mail wasn’t immediately responded to.
Sina, which runs a Twitter-like Weibo service in China, advanced for a third day, rising 3.9 percent to a five-month high of $66.90.
Dangdang’s added services could be a new revenue stream for the online retailer, while Sina offers growth potential as it is further monetizing its Weibo service, Adam Krejcik, an analyst at Roth Capital Partners LLC, said yesterday by phone.
China Unicom Rises
ADRs of China Unicom, the nation’s first wireless carrier offering iPhone service plans, surged 3.8 percent to a four- month high of $17.21. The ADRs, each representing 10 underlying shares in the company, traded 1.9 percent above its Hong Kong shares, the widest premium since Aug. 23.
The mobile company is expected to start selling Apple’s iPhone 5 within three months, China’s Caixin magazine reported yesterday, citing an unidentified source with China Unicom.
Carl Howe, an analyst at Boston-based Yankee Group, joined analysts predicting that Apple will sell more than 10 million iPhone 5s by month’s end, after the company unveiled the lighter and speedier device Sept. 12 in San Francisco. That projection would surpass the record set last year by the previous model, the iPhone 4S.
ADRs of China Telecom, the smallest among the nation’s three wireless carriers, advanced 4.2 percent to $62.54, the highest level in 10 months. The company in March became the second iPhone service provider in China after Unicom. The 1.9 percent premium in China Telecom’s ADRs over its Hong Kong stock was the highest since Aug. 22.
Ambow Education Holding Ltd. (AMBO), a Beijing-based private tutoring services provider, jumped 10 percent to $2.92, the highest level since Sept. 4.
EVA Dimensions raised its recommendation on the stock yesterday to overweight from hold. All of the company’s one-on- one tutoring centers are legally registered with local industrial registration agencies and tax bureaus, and the company is not aware of any pending regulatory reviews, Beijing- based Ambow said in a Sept. 6 statement. It said it doesn’t expect any restatement of previous financial results.
The company tumbled 27 percent on Sept. 5 after saying in an online statement it had started an internal investigation following a report from China’s state television that its unit exaggerated training results and that the schools’ registrations were incomplete.
The Shanghai Composite Index (SHCOMP) sank 0.8 percent, the most in two weeks, to 2,110.38 yesterday. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies dipped 0.1 percent to 9,480.27.
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