Chinese equities in New York retreated from the highest level in almost three weeks on concern the U.S. fiscal showdown and Europe’s continuing debt crisis will limit the recovery in Asia’s largest economy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in the U.S. fell 1 percent to 92.70 yesterday, retracing a 2.3 percent jump on Nov. 23. Air carrier China Eastern Airlines Corp. (CEA) sank, while 21Vianet Group Inc. (VNET), an Internet data center operator, slid the most in more than a week. China Telecom Corp. (CHA) traded at the widest discount to Hong Kong shares since Nov. 16. Zhongpin Inc. (HOGS), a Chinese pork producer, surged 15 percent after approving a $502 million buyout offer.
The China-US gauge has lost 15 percent since the end of 2010 as the nation endured a seven-quarter slowdown amid a faltering global export market. China may set a growth target for 2013 equal to this year’s eight-year low of 7.5 percent at a meeting in December, China Business News reported. The U.S. is seeking to avoid $607 billion of automatic tax increases and spending cuts from coming into force next year, while European finance ministers are meeting over a bailout payment for Greece.
“There’s no great expectations of an acceleration in growth,” Edmund Harriss, who helps manage a $150 million equity fund at Guinness Atkinson Asset Management, which also invests in Chinese stocks, said in a phone interview from London yesterday. “For the moment, people are sort of standing off a little bit.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., dropped 0.4 percent to $37.33 in New York, as the Standard & Poor’s 500 Index of U.S. equities fell 0.2 percent. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares lost 0.5 percent to 2,017.46 yesterday, while the Hang Seng China Enterprises Index (HSCEI) slipped 0.4 percent to 10,568.41.
21Vianet, based in Beijing, retreated 3.2 percent to $9.81, the biggest one-day decline since Nov. 16, while E-House China Holdings Ltd. (EJ), a property services provider based in Shanghai, sank 3.9 percent to $3.49.
China Eastern lost 3.2 percent to $17.36 as the nation’s second-largest air carrier said its China United Air unit would more than double its fleet by 2015.
American depositary receipts of China Telecom, the country’s biggest fixed-line phone carrier, fell 2.5 percent to $55.47, the steepest one-day decline in two weeks. The ADRs traded at a 0.3 percent discount to the company’s equivalent shares in Hong Kong.
Zhongpin, a meat producer based in Changge, in China’s Henan province, jumped to $12.50, the highest close since June last year.
Golden Bridge Holdings and its Golden Bridge Merger Sub Ltd. unit, both owned by Zhongpin’s chairman and chief executive officer, Zhu Xianfu, will pay $13.50 a share for the 74 percent of the company they and other investors participating in the buyout don’t already own, the company said in a filing yesterday.
Zhu proposed taking the company private in March, and the deal, partly financed by a loan from state-owned China Development Bank Corp, is expected to close by the first quarter of 2013, Zhongpin said.
Chinese companies are withdrawing from U.S. exchanges as accusations by short sellers of accounting irregularities depress valuations. Since April 2010, 49 companies -- including Focus Media Holdings Ltd. and 7 Days Group Holdings Ltd. (SVN) -- have announced their intention to go private and de-list from U.S. markets, according to a report by Roth Capital Partners issued Nov. 5. Excluding Zhongpin, 19 companies have completed their buyout deals.
Premium Wen Jiabao cut China’s growth target to 7.5 percent for this year, the lowest goal since 2004 and down from 8 percent in 2011, as exports slumped and the government damped gains in the real estate market. Policy makers may maintain the target at the same rate in 2013 to maintain continuity of policy, China Business News reported, citing people it didn’t identify.
Pu Yonghao, regional chief investment officer for the Asia Pacific at UBS AG’s wealth management unit in Hong Kong, said he’s betting that Chinese stocks will rally as the economy shows signs of revival.
Huaneng Power International Inc. (600011) retreated 1.9 percent to $32.37 in New York. The benchmark Chinese price for coal used in power stations fell to the lowest level since Oct. 7 as inventories at the port of Qinhuangdao increased, according to data issued yesterday from the China Coal Transport and Distribution Association.
NQ Mobile Inc. (NQ), a mobile Internet service provider, slipped 1.8 percent to $6.09 after soaring 9.9 percent on Nov. 23. The Beijing-based company said it may use its cash to buy as much as $20 million of its own shares over the next 12 months, according to a PR Newswire statement yesterday. The current share price “severely undervalues” the company and the buyback program reflects the management’s belief in its business, according to the statement.
NQ stock has lost 43 percent since rising to a 2012 peak in May. The company now trades at 6.6 times its estimated earnings over the next 12 months, from 8.1 times a month ago, according to data compiled by Bloomberg.
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