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Melco Drives ADR Gain on U.S. Jobless Rate: Overnight

Chinese equities in New York climbed, driving the benchmark index toward a three-week high, as an unexpected drop in the U.S. jobless rate bolstered the outlook for exports and the global economy.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. gained 0.8 percent to 93.37 by 2:42 p.m., set to advance 1.5 percent in the week. China Life Insurance Co. rose to trade at a premium to its Hong Kong stock for a fifth day, while Melco Crown Entertainment Ltd. (MPEL) jumped the most since Sept. 27 as Union Gaming Group LLC said visitors to Macau casinos surged during this week’s holiday. Ambow Education Holding Ltd. (AMBO) rebounded from a four-week low.

The U.S. unemployment rate defied economists’ expectations to fall to the lowest level since President Barack Obama took office in January 2009, a Labor Department report yesterday showed. Growth in China, the world’s largest exporter, has slowed to the least in three years as a faltering U.S. economy and the European debt crisis sap global demand for manufactured goods.

The jobless rate drop “supports the view that the labor market is improving and consumer spending should accelerate,” Eric Brock, who helps manage $3.8 billion as a portfolio manager at Clough Capital Partners, said by phone yesterday from Boston. “An acceleration in U.S. household spending will help Chinese exports improve, which means manufacturing in China is poised to recover.”

China ETF Rises

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 0.9 percent to $35.47, the highest level since May 10 based on closing prices. The Standard & Poor’s 500 Index (SPX) was little changed at 1,461.58.

China Life, the nation’s biggest insurer, added 2.3 percent in its second day of gains to $44.58, the highest since Sept. 14. It has advanced 2.7 percent this week, snapping a two-week slump. The ADRs, each representing 15 underlying shares in the company, traded 0.9 percent above its Hong Kong stock, the biggest premium in three weeks.

Melco Crown, a casino operator in Macau, climbed 1.9 percent to $13.22, set for a weekly advance of 2 percent.

Over the first four days of the so-called golden week holiday in China, Macau has received more than 535,000 visitors, 76 percent of which are from the mainland, Union Gaming analyst Grant Govertsen said in a note yesterday. Visits on Oct. 1 grew 9.7 percent from a year ago and the pace accelerated each day to 20.3 percent on Oct. 4, he wrote.

Steven Sun, the head of China equity strategy at HSBC Holdings Plc in Hong Kong said he favors Macau gaming companies and Hong Kong property stocks, in an interview with Bloomberg Television yesterday.

Ambow Gains

Ambow, a Beijing-based private tutoring service provider, rebounded 4.3 percent to $2.67 after sinking 11 percent on Oct. 4.

“This stock is quite illiquid, and probably some selling caused some short moment of flash crash,” Ambow’s Chief Strategy Officer Jenny Zhan said in a phone interview yesterday from California. “We don’t see anything unusual from the fundamental perspective. We’ll announce Q2 earnings as soon as possible.”

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

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