Chinese oil companies led declines in an index (HSCEI) of the nation’s stocks in New York as the Asian Development Bank lowering its growth forecast fueled concern over a slowdown in the world’s second-largest economy.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. sank 0.4 percent to 91.93 yesterday. PetroChina Co. (PTR) retreated for the first time in three days as crude slid to a two-month low, and Cnooc Ltd. (883) dropped to the biggest discount to its Hong Kong stock in six days as trading there resumed following a holiday. Aluminum Corp. of China fell after canceling a plan to invest in a Mongolian coal exporter.
The ADB cut its forecast yesterday for Chinese economic growth to 7.7 percent this year from a previous estimate of 8.2 percent. The Manila-based lender also said downside risk for China’s economy, which grew at the slowest pace since 2009 in the second quarter, may intensify. The service sector expanded at the weakest pace last month since at least March 2011, a government purchasing managers’ index released yesterday showed.
“Investors are adjusting to the slowdown,” Christopher Palmer, who helps manage $2.5 billion of assets as a London- based director of global emerging markets for Henderson Global Investors Ltd., said by phone yesterday. “How to get the Chinese spending again is a really important issue. The government clearly wants to get the non-manufacturing segments going again.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., was little changed at 34.91. The Standard & Poor’s 500 Index (SPX) advanced for a third day, adding 0.4 percent to 1,450.99 as better-than-forecast growth in U.S. employment and services data offset concerns over China.
Cnooc, China’s largest offshore oil explorer, slid 1.2 percent to $201.19 in New York, declining for the first time in three days. The company’s American depositary receipts, each representing 100 underlying shares in the company, traded 1.5 percent below its Hong Kong stock, the widest discount since Sept. 25, data compiled by Bloomberg show.
Alison Redford, the premier of Canada’s Alberta province, asked the federal government to impose tougher management and employment conditions on Cnooc’s $15.1 billion takeover offer for Calgary-based Nexen Inc. before approving the transaction, according to a person familiar with the matter who asked not to be identified because the discussions are confidential.
Redford wants guarantees that at least 50 percent of Nexen’s board and management positions will be held by Canadians, the person said.
ADRs of PetroChina, China’s biggest oil producer, retreated 1.5 percent to a one-week low of $128.83 after rising in the previous two days.
Crude oil for November delivery declined 4.1 percent to $88.14 a barrel on the New York Mercantile Exchange, the lowest settlement since Aug. 2. The U.S. Energy Department said yesterday crude output rose to 6.52 million last week, the most since December 1996. Total fuel demand fell 0.3 percent to 18.3 million barrels a day in the four weeks ended Sept. 28, the lowest level since April.
Beijing-based China Life Insurance Co. (LFC), the nation’s largest insurer, slid for a second day, losing 1.1 percent to $43.05 in New York.
Stanley Tsai, a Hong Kong-based analyst at Keefe Bruyette & Woods Ltd. reiterated an underperform recommendation, equivalent to sell, for China Life on Sept. 27. His estimated 12-month price target of HK$21.7 is 2 percent below the stock’s closing level in Hong Kong yesterday.
Aluminum Corp., also known as Chalco and the biggest maker of the lightweight metal in China, dropped 1.5 percent to $10.06, the most in a week.
Beijing-based Chalco terminated an agreement to buy a 30 percent stake in Mongolian coal exporter Winsway Coking Coal Holdings Ltd. due to a lack of approval by relevant governments and regulators, the companies said on Sept. 28.
AsiaInfo-Linkage Inc. (ASIA), a telecommunications software provider, plunged 4.9 percent to a two-month low of $10.59, extending its slump to a fifth day.
The Beijing-based company, which sells software to China’s biggest wireless carriers, said in a July 30 statement that it continued to consider buyout proposals after receiving an offer in January from a subsidiary of Citic Capital China Partners II, a private-equity fund owned by China Citi Bank Corp.
AsiaInfo said in the July 30 statement that while the company continues to consider buyout proposals “there can be no assurance that any definitive offer will ultimately be made, that any agreement will be executed, or that any transaction will be approved or consummated.” The company hasn’t announced any price offerings. Kun Tao, an analyst at Roth Capital Partners, estimated in July a buyout price of $14 to $15 per share.
E-Commerce China Dangdang Inc. (DANG), the largest online book retailer in China, sank for a fourth day in New York trading, the longest losing stretch since Aug. 21. Its ADRs lost 3.1 percent to $4.37, the lowest level since Dec. 29.
The Hang Seng China Enterprises Index of Chinese companies was little changed at 9,828.22 yesterday as trading resumed in Hong Kong following a two-day holiday. Markets in mainland China are closed for a week-long holiday.
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