Chinese equities jumped the most in two months in New York as Sina (SINA) Corp. soared on a report e-commerce giant Alibaba Group Holding Ltd. will buy as much as 20 percent of the Internet company’s Twitter-like Weibo service.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. gained 2.2 percent to 91.58 yesterday, the biggest advance since Sept. 27. Sina jumped as much as 13 percent after China Business News said Alibaba values Weibo at $3 billion. SouFun Holding Ltd. (SFUN) climbed on rising home-price data. China Unicom (Hong Kong) Ltd. (CHU) traded at the biggest premium over Hong Kong since September after adding the most third-generation mobile users this year last month.
The China-US measure gained after the Shanghai Composite Index (SHCOMP) rebounded from below the key 2,000 level for the second time in eight weeks, ending the day 0.1 percent higher. The market’s ability to hold that “psychological level” is bullish in the short term, according to Auerbach Grayson & Co. Shanghai-based Sina, which has a market value of $3.2 billion, has lost 6.6 percent in New York this year, and traded for 61 times estimated earnings on Nov. 14, the least since May.
“Alibaba’s reported valuation of Sina’s Weibo, if it is real, gives a significant premium” to the short-message social network, Echo He, a senior analyst at Maxim Group LLC who rates the stock sell, said by phone in New York yesterday. “Sina does need the investment to further support its development on Weibo.”
China ETF Jumps
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 2.2 percent to $36.55 yesterday in New York, the steepest one-day gain since Nov. 1. The Standard & Poor’s 500 Index climbed 2 percent to 1,386.89, as U.S. President Barack Obama expressed confidence that he will be able to achieve agreement with Congress over the nation’s budget.
Sina’s shares increased 7.8 percent to $48.59 in the U.S., the biggest one-day jump since Nov. 5. They earlier surged as much as 13 percent to $50.80.
Alibaba, China’s biggest e-commerce company, may buy a 15 percent to 20 percent stake in Sina’s Weibo business, the report by China Business News cited Cheng Lingfeng, a person in the media industry, as saying.
China Unicom’s American depositary receipts advanced 5 percent to $15.42, the steepest climb since Aug. 23. The ADRs, each representing 10 underlying shares, traded 1.5 percent above its Hong Kong stock, the widest premium since Sept. 13.
China Telecom Dividend
The nation’s second-largest wireless operator, China Unicom added a net 3.2 million 3G users for a total of 70.07 million last month, according to data published on its website yesterday. The increase compared with a 3.18 million gain in September and was the biggest monthly addition this year.
China Telecom Corp. (CHA), the nation’s biggest fixed-line phone carrier, may raise its 2013 dividend to 9.5 Hong Kong cents (1.2 cents) from 8.5 cents after investors requested higher payouts, Hong Kong’s Apple Daily reported, citing an unidentified person in the fund industry. The company’s ADRs gained 3.4 percent in New York, the most since Sept. 13, to $55.07. The ADRs’ 1.4 percent premium over Hong Kong shares was also the widest in two months.
The Shanghai Composite rose to 2,016.98 by the close of trading yesterday, paring its decline this year to 8.3 percent. A rally in the final hour lifted the gauge from an intraday low of 1,995.77. The gauge last breached 2,000 during intraday trading on Sept. 26.
‘Taking a Shot’
The rebound may have been spurred by government-backed buying of stocks “but I don’t think anybody knows,” Richard Ross, a technical strategist at Auerbach Grayson said by phone in New York yesterday. Even in the case of intervention, “I would still say this is a good place to be taking a shot here,” he said, predicting a 5 percent to 7 percent gain in the Shanghai measure this year.
The Hang Seng China Enterprises Index (HSCEI) of companies traded in Hong Kong, the gauge of so-called H shares, rose 0.5 percent to 10,290.21 yesterday, climbing for a second trading day.
“I would be better a buyer of H shares than local Chinese shares,” Ross said. “I see a nice rally in global equities through the year-end and H shares stand to benefit accordingly.”
China’s ruling Communist Party last week completed the most important phase of its once-a-decade power transition, as Xi Jinping replaced Hu Jintao as the head of the party and the nation’s military. The move ushers in the fifth generation of leaders to take control of the world’s second-biggest economy.
“There’s still uncertainty about the direction that the new administration is going in,” Timothy Ghriskey, chief investment officer at New York-based Solaris Group LLC, which manages about $2 billion of assets including Chinese stocks, said by phone yesterday. “Investors are sort of holding back now as they would want to see actually what happens in actions, not just in words.”
SouFun, China’s biggest real estate information website, added 2.9 percent to $18.15 in New York, the biggest rally in two weeks.
New home prices in the nation climbed in 35 of the 70 cities the government tracks in October, compared with 31 in September, according to data from the statistics bureau issued yesterday. Prices fell in 17 cities.
21Vianet Group Inc. (VNET), a Beijing-based Internet data-center service provider, surged after Piper Jaffray & Co. analyst Christopher Larsen raised his price estimate by $1 to $16 yesterday. He reiterated a buy recommendation on the stock.
Yuan NDFs Strengthen
21Vianet’s ADRs rose 7 percent to $9.94, the biggest advance since Aug. 27. They rebounded from a three-month low reached on Nov. 16.
Twelve-month non-deliverable forwards on the yuan climbed 0.23 percent to 6.3325 per dollar in New York, strengthening the most since Oct. 25, after the currency rose 0.02 percent to 6.2345 in Shanghai yesterday. The currency traded at a 1 percent premium to the central bank’s daily fixing, the maximum it’s allowed to fluctuate, according to the China Foreign Exchange Trade System.
Thirty-day volatility in the Bloomberg China-US gauge was 18.37 yesterday, up from 17.15 on Nov. 16, and compares with this year’s average of 22.59. The Bloomberg Chinese Reverse Mergers Index, which tracks a basket of companies that gained U.S. listings after buying firms that already trade, added 1.7 percent to 70.71.
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