7 Days Leads Consumer Bounce on Economy: China Overnight

Chinese equities traded in New York climbed, led by consumer stocks, after a leading index signaled that the nation’s economic slowdown may be abating.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. added 0.1 percent to 91.67 by 1:44 p.m. in New York, as budget hotel owner 7 Days Group Holdings Ltd. (SVN) climbed to the highest level in three months. Melco Crown Entertainment Ltd. (MPEL) rose the most since Sept. 7 as JPMorgan Securities said the “Macau gaming market will experience a rebound in growth.” Yingli Green Energy Holdings Co. (YGE) gained on a report China will boost support for some solar companies.

A gauge for China’s economy compiled by the New York-based Conference Board climbed at the fastest pace in seven months in August, according to a preliminary reading released yesterday. China’s gross domestic product grew 7.6 percent in the second quarter from a year earlier, the smallest expansion in three years, as faltering growth in the U.S. and the European debt crisis curb demand for the nation’s exports.

“China’s economy is not nearly as bad as people have feared,” Jerome Booth, the London-based head of research at Ashmore Investment Management, which oversees $63 billion of emerging-markets assets, said by phone from London yesterday. “In fact, China’s engineered shift from exports to a consumer- led economy is continuing apace, and so we’re seeing some better data.”

Economic Expansion

China’s economy will expand faster than 7 percent for several years, Commerce Minister Chen Deming said at an event in Toronto hosted by the Canada China Business Council and the Canada China Chamber of Commerce. Chen’s visit takes place as the Canadian government reviews Beijing-based Cnooc Ltd. (CEO)’s $15.1 billion bid for Calgary-based oil and gas producer Nexen Inc. (NXY)

U.S. consumer confidence rose more than forecast in September to a seven-month high while housing prices advanced in July, reports issued yesterday showed. The U.S. data also helped “to improve sentiment toward risk assets, such as China,” Booth said.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., fell 0.5 percent to $34.48, while the Standard & Poor’s 500 Index (SPX) declined 0.2 percent to 1,454.10.

7 Days Group, China’s second-biggest budget hotel owner, surged to the highest since June 26 as shares jumped 8.8 percent to $10.65. Shares have gained 18 percent since Sept. 20.

American depositary receipts of Hong Kong-based Melco Crown gained for the first time in four days adding 2.8 percent to $13.06 as JPMorgan Securities, in a Sept. 25 investor note led by analyst Joseph Greff, said a rebound in the Macau gaming market will “serve as a likely catalyst for positive estimate revisions.”

‘Mass Market’

Macau casinos may benefit from more “mass market” visitors and a “slight” increase in junkets’ credit to VIP patrons as well as easing by Chinese monetary authorities, Greff said.

Melco Crown said it amended a shareholders’ agreement to invest a further $350 million of equity capital in its Studio City project. Macau’s Public Works & Transport department in July gave Melco Crown approval for the project, a five-star hotel and film production facilities on a 130,789 square meter (1.4 million square foot) site.

Focus Media Holding Ltd. (FMCN), the Chinese advertising company that may be acquired by a consortium that includes Carlyle Group LP (CG), climbed 2.1 percent to $23.39, the most since the company’s board received a $27 per share “going private” proposal on Aug. 13. The acquisition of Shanghai-based Focus Media would mark China’s largest leveraged buyout.

Yingli, based in Baoding of China’s northern Hebei province, added 1.8 percent to $1.72, the most in two weeks, as the official China Securities Journal reported that state-owned lender China Development Bank Corp. is preparing to recommend stronger financial support for solar companies.

Trina Solar Ltd. (TSL), the world’s fourth-largest solar-panel manufacturer, was also mentioned in the report as being slated for government aide. Trina added 0.9 percent to $4.44.

To contact the reporters on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at Eobrien6@bloomberg.net

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