Chinese stocks fell for the first time in three days in New York, on speculation investors are waiting for policy indications from the new government after shares jumped to the most expensive level since October.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese equities in the U.S. fell 0.2 percent to 96.55 yesterday. China Unicom (Hong Kong) Ltd. (CHU), the nation’s second- largest mobile-phone company, fell a sixth day, while China Telecom Corp. (CHA) slid to a three-month low. China Life Insurance Co. (LFC) sank the most in a week. American depositary receipts of Melco Crown Entertainment Ltd. (6883) erased their premium over Hong Kong shares as trading in the city resumed after the New Year holiday.
The China-U.S. gauge has lost 3.6 percent this month after an 8 percent surge in December and January. Companies on the measure traded at an average 13 times estimated profit, down from a two-month high of 14 reached Jan. 10, according to data compiled by Bloomberg. The new government leadership, to be installed at the National People’s Congress starting March 5, may announce fresh measures to damp the property market before the meeting, the Shanghai Securities Journal reported Feb. 6.
“People are still waiting for possible new economic measures from the new leadership before the March Congress,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages about $700 million of investments including Chinese equities, said by phone from Lisle, Illinois. “Chinese stocks are also taking a breather after big rallies in benchmark indexes in previous months.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., climbed for a third day, adding 0.4 percent to $40.22 in New York. The Standard & Poor’s 500 Index (SPX) was little changed at 1,521.38 as declining U.S. jobless claims and billionaire investor Warren Buffett’s deal to acquire H.J. Heinz Co. tempered concern over shrinking economies in Europe and Japan.
The ETF had gained for five consecutive months before retreating in February. The Hang Seng China Enterprises Index has rallied 31 percent since its September low.
“The correction in Chinese equities is very natural,” Colin Bell, vice president of emerging markets for Auerbach Grayson Co. in New York, said by phone yesterday. “Large institutions put in new money to work and that tends to happen in a big way in January. It’s often hard for investors to put more money to work in February.”
China Unicom’s ADRs dropped 1.5 percent to $14.86, the lowest level since Nov. 16. Its ADRs traded 0.8 percent below Hong Kong shares, the widest discount since Feb. 7. China Telecom, the smallest of China’s three biggest wireless carriers, slumped 1.4 percent to a three-month low of $52.28. China Mobile Ltd. (CHL), the world’s largest mobile-phone company by users, retreated 0.5 percent to $55.34 after rising in the previous two days.
Investors are concerned about China Unicom’s slowing growth in third-generation service users as bigger competitor China Mobile is set to start its fourth-generation service this year, according to Jun Zhang, a San Jose, California-based analyst at Wedge Partners Corp. China Telecom may spend more than the other two carriers in building its 4G network, Zhang said in an e-mail yesterday.
ADRs of China Life, the nation’s biggest insurer, fell 1.1 percent to $47.33 in New York, the steepest slide in a week.
Melco, which runs casinos in Macau, retreated 0.3 percent to $20.92 in New York, after jumping 2.1 percent on Feb. 13. Its ADRs traded 0.3 percent below its Hong Kong shares, erasing the previous day’s 5.7 percent premium, the highest since August.
Youku Tudou Inc. (YOKU), owner of China’s most-popular websites, jumped 6.7 percent to $22.52, the steepest rally since Jan. 10. The company had the biggest gain on the China-US stock benchmark.
China Natural Gas Inc. (CHNG), operator of a natural-gas pipeline in the nation, tumbled 29 percent to 55 cents in New York, the biggest slide since June. The company was hit on Feb. 8 with an involuntary Chapter 11 petition filed by three creditors collectively owed $42.2 million on senior notes, according to a filing to the Securities and Exchange Commission yesterday.
Thirty-day volatility on the China-US gauge fell to 15.6 yesterday, the lowest level this year and compared with an average of 18 over the past six months.
The Hang Seng China Enterprises Index (HSCEI) climbed 1.5 percent to 11,821.44 in the first trading day after a three-day holiday in Hong Kong. Mainland markets remain closed until Feb. 18.
Hong Kong Exchanges & Clearing Ltd. (388), the world’s largest exchange company by market value, said yesterday it received regulatory approval to start after-hours futures trading and will begin the service on April 8.
Hang Seng Index and H-shares Index futures will be available for trading from 5 p.m. to 11 p.m. from the date, in addition to regular hours, the bourse said in a statement. Gold futures will also be considered for inclusion at a later stage, it said.
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