New Oriental Jumps as Rising Exports Fuel Rally: China Overnight

Chinese stocks in New York rose to a five-month high, as the fastest growth in money supply since June last year and better-than-estimated export data boosted prospects the economy is rebounding.

The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. gained 1.1 percent to 94.76 yesterday, the highest level since May 15. New Oriental Education & Technology Group (EDU) Inc. jumped after Oppenheimer & Co. upgraded the shares and Deutsche Bank AG reinstated the stock’s buy rating. American Lorain Corp. (ALN) surged to a six-month high after receiving a buyout proposal. Aluminum Corp. of China traded at the widest premium to Hong Kong in four weeks.

M2, China’s broadest measure of money supply, rose at the quickest pace in 15 months in September, central bank data issued Oct. 13 showed, signaling the world’s second-largest economy is stabilizing after slowing the most since 2009 in the second quarter. Overseas shipments rose 9.9 percent last month from a year earlier, beating the median economist projection of 5.5 percent, a government report on the same day showed.

“The data definitely are showing improving conditions, especially monetary conditions are looser than a year ago,” Audrey Kaplan, the lead manager of the $540 million Federated InterContinental Fund, said by phone in New York yesterday. “These should be supportive of stocks. We see China’s slowdown as moderate, and there are signs that its growth has bottomed.”

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., gained 0.7 percent to $36.65, the strongest level since May 7. The Standard & Poor’s 500 Index (SPX) jumped 0.8 percent to 1,440.13, after U.S. retail sales data for September and Citigroup Inc.’s earnings topped estimates.

‘Favorable Outlook’

The Shanghai Composite Index (SHCOMP) slipped 0.3 percent yesterday to a one-week low of 2,098.70. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong climbed 0.3 percent to 10,375.32, the highest level since May 8.

New Oriental, an education company based in Beijing, climbed 4.4 percent to $17.89 in New York, after surging as much as 13 percent.

Oppenheimer raised its rating on the company to the equivalent of buy from market perform, citing a “favorable outlook” for the company’s pending investigation by U.S. regulators.

New Oriental filed its annual report for the 2012 fiscal year ended May 31 on Oct. 12 after markets closed, with the consent of its auditor Deloitte Touche Tohmatsu CPA Ltd. The U.S. Securities and Exchange Commission has no objection to the inclusion of New Oriental’s schools into its China-based units, and the consolidation of its Chinese entity into the listed company’s financial statements, according to a separate statement on the same day.

TAL Education Jumps

New Oriental said on July 17 that the SEC had started an investigation into the company’s consolidation of its units’ financial statements.

Deutsche Bank reinstated its buy recommendation on the stock and Wells Fargo Securities LLC maintained an outperform rating yesterday. Piper Jaffray Cos lifted its target price for the New Oriental to $27 from $22 while retaining an overweight, or buy, rating.

Beijing-based TAL Education Group (XRS) advanced 4.1 percent to $8.91, the highest level since Aug. 23, while Ambow Education Holding Ltd. (AMBO) jumped 5.4 percent to $2.75.

‘Strong’ Start

Home Inns & Hotels Management Inc. (HMIN), the largest budget hotel chain operator in China, rallied 2.4 percent to $28.20, the highest level in seven months. The Shanghai-based company had a “strong” start to the fourth quarter, Ella Ji, an analyst at Oppenheimer in New York, said in an e-mailed client note on Oct. 9.

“Hotels in major tourism cities had 100 percent occupancy” during the week-long national holiday earlier this month, Ji wrote.

Chinese consumer prices rose 1.9 percent from a year earlier in September, a report from the government statistician showed yesterday. That’s close to the slowest pace in two years. Producer prices fell 3.6 percent, the seventh straight decline.

Aluminum Corp., known as Chalco, climbed 2.7 percent to a one-month high of $10.98 in New York. The company’s American depositary receipts, each representing 25 underlying shares, traded 1.6 percent above its Hong Kong shares, the biggest premium since Sept. 14.

Going Private

American Lorain, a food processing company based in Yantai, China, jumped 12 percent to $1.39 in New York, the steepest rally in six months.

Chief Executive Officer and President Si Chen offered to buy all outstanding shares in the company for $1.60 per share, American Lorain said yesterday in a statement. The go private offer from Chen, who currently owns 46.5 percent of the company’s shares, is a 29 percent premium to the stock’s closing price on Oct. 12.

Gushan Environmental Energy Ltd. (GU), a copper and biodiesel producer based in China’s Fuzhou city, said yesterday that its shareholders approved a privatization plan first announced Feb. 24. The Fuzhou, China-based company’s ADRs were unchanged at $1.59.

Citic Securities Co., China’s largest brokerage by market value, is seeking to raise 5 billion yuan ($800 million) to 10 billion yuan for its first private equity fund, President Boming Cheng said at an annual conference of the Chinese Finance Association in New York on Oct. 14. The money, which is being raised from Chinese institutions including government agencies, will be used to help buy stakes in companies involved in merger and acquisition transactions, he said.

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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