Chinese equities climbed in New York, and the biggest exchange-traded fund for the nation’s stocks soared to a six-month high, as better-than-estimated company earnings bolstered the outlook for Asia’s largest economy.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. rose 0.5 percent to 95.71, while the iShares FTSE China 25 Index Fund ETF added 0.8 percent to $38.11, the highest since May 2. Semiconductor Manufacturing International Corp. (981) also surged to a May high after JPMorgan Chase & Co. upgraded the stock, while Baidu Inc. (BIDU) rebounded from a 22-month low as Moody’s Investors Service rated the Internet company’s debt A3.
Travel website Ctrip.com International Ltd. (CTRP) became the ninth company in the China-US gauge to post third-quarter earnings that exceeded analysts’ estimates today, compared with eight stocks that reported disappointing results, data compiled by Bloomberg show. The positive earnings season is helping Chinese U.S.-traded stocks to their fourth straight month of gains, with data from manufacturing to retail sales bolstering China’s outlook after the economy’s seven-quarter slowdown.
“We are seeing some companies report decent growth,” Charlie Awdry, who manages the $750 million China Opportunities Fund at Henderson Global Investors Ltd., said by phone from London yesterday. “We tend to favor consumer-driven and information technology companies.”
The Standard & Poor’s 500 Index (SPX) rose 0.8 percent to 1,428.39 as Americans vote in their presidential election. The Hang Seng China Enterprises Index (HSCEI) of Chinese stocks traded in Hong Kong declined 0.3 percent to 10,734.42, while the Shanghai Composite Index (SHCOMP) lost 0.4 percent to 2,105.99, the biggest one-day slide since Oct. 26
Chinese equities are likely to outperform the rest of emerging markets as local consumption drives gains, Manu Vandenbulck, a senior portfolio manager at ING Investment Management, said in an interview in London yesterday. ING likes shares of China Mobile Ltd. on expectations mobile-phone use will continue to climb, Vandenbulck said.
American depositary receipts of China Petroleum and Chemical Corp., the nation’s largest refiner, fell 0.2 percent to $107.24 in New York, compared with a 0.7 percent drop in its shares in Hong Kong. The ADRs traded at 1.1 percent premium over equivalent shares listed in the Chinese city, the most since Sept. 14.
Mindray Medical International Ltd. (MR) tumbled 7.7 percent to $31.9 in the U.S., the biggest slump in a year, as the Chinese medical device maker reported earnings and sales that trailed analysts’ forecasts. The company posted adjusted net income of 42 cents per share, compared with the average of five analysts’ forecasts compiled by Bloomberg for 45 cents. Mindray expects full-year net income to grow at least 15 percent from 2011, they said yesterday.
The Shenzhen-based company also said that its co-Chief Executive Officer Xu Hang resigned from the post and will continue to serve as chairman to bolster corporate governance.
Ingrid Yin, an analyst at Oppenheimer & Co., is retaining an outperform rating on Mindray stock as the growth of the health-care industry in China and emerging markets, which account for about 75 percent of company revenue, remains “solid.” The shares are valued at 13 times estimated earnings after subtracting cash and are attractive as Mindray is likely to accelerate growth, according to Yin.
“The third quarter will be the trough,” she said in a phone interview. “It’s a good company at attractive prices.”
LDK Solar Co., the second-biggest maker of solar wafers, was the biggest gainer on the China-US measure, jumping 13 percent to 98 cents, the highest level in almost four weeks. The company agreed to terminate a contract to supply products to Sumitomo Corp. for a $33.4 million settlement. China’s solar industry is facing problems of oversupply, which have been cutting profits.
Xinyu, China-based LDK also replaced its CEO and hired five other board members, according to a Nov. 5 statement.
Baidu, owner of China’s biggest online search engine, rose 2.1 percent to $105.94 in New York as Moody’s rated the company A3, the same level as Hewlett-Packard Co., the U.S. personal computer maker. The first-time rating reflects Baidu’s “dominant” position in the Chinese Internet search market, Moody’s said in a statement on Nov. 5.
Ctrip.com, the largest online travel agency in China, jumped as much as 7.2 percent before ending with a 1.3 percent gain to $20.32 in the U.S. The company reported net income of 35 cents, compared with an average of 31 cents from 10 analysts’ estimates.
Semiconductor Manufacturing, a chipmaker based in Shanghai, climbed 6.2 percent to $2.23, the highest level since May 15, after JPMorgan raised the company to the equivalent of buy, from neutral. Semiconductor reported third-quarter profit on Nov. 5, from a loss a year earlier.
VanceInfo Technologies Inc., a Beijing-based information technology service provider, rose 0.5 percent to $8.02, the highest level since Sept. 20, as shareholders approved a $875 million merger with HiSoft Technology International Ltd.
VanceInfo and Dalian, China-based HiSoft, which counts General Electric Co. and Microsoft Corp. as customers, agreed in August to an all-stock merger in which shareholders would each own approximately 50 percent of the combined company. HiSoft will be the surviving listed stock. It gained 0.8 percent to $10.77, the highest since Sept. 20.
China Eastern Airlines Corp. (CEA), the nation’s second-biggest domestic carrier, dropped 3.5 percent to $18 after Credit Suisse Group AG cut its recommendation to the equivalent of sell. A territorial dispute between China and Japan over islands in the East China Sea is hurting travel demand, analyst Davin Wu wrote in a report dated yesterday.
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