Chinese stocks traded in the U.S. posted their first back-to-back weekly declines since November on speculation policy makers are shifting their focus from supporting the economy to curbing asset prices.
The Bloomberg China-US Equity Index of the most-traded Chinese equities in the U.S. fell 0.4 percent to 96.35 this week, after losing 4.2 percent in the five days to Feb. 8. Chipmaker Spreadtrum Communications Inc. sank the most in two months. LDK Solar Co. led gains among solar stocks on optimism alternative energy demand is growing. Mainland Chinese markets resume trading Feb. 18 after the week-long New Year holiday.
China’s new leaders, to be installed at the National People’s Congress starting March 5, are set to announce fresh measures to damp growth in the property market before the meeting, the Shanghai Securities News reported Feb. 6. While the government has refrained from easing monetary policy to push the economy out of its slowdown, data this month showed new home prices rose the most in two years in January.
“The government doesn’t want an overheating housing market and there’s a slight worry that they will take action sooner rather than later,” Elena Ogram, who manages $50 million in emerging-market assets, including Chinese stocks, at Bank am Bellevue AG in Zurich, said by phone yesterday. “Housing prices are one of the sensitive indicators.”
American depositary receipts of Melco Crown Entertainment Ltd. fell 0.5 percent this week to $20.78, after rallying to a six-year high Feb. 1. The ADRs traded 1.2 percent below the Macau casino company’s Hong Kong shares, the biggest discount since Feb. 6. The U.S.-listed stock traded at a 5.1 percent premium to Hong Kong Feb. 8, data compiled by Bloomberg show.
ADRs of Spreadtrum, based in Shanghai, slumped 4.2 percent in the week to $15.49, the lowest level since Feb. 4.
Ambow Education Holding Ltd., a Beijing-based education provider, rallied 21 percent to $1.64 in New York, the biggest gainer on the China-US gauge this week. Ambow has tumbled 56 percent since July 5, when the company said it would conduct an internal investigation into allegations by a former employee of financial impropriety and wrongful conduct in connection with the purchase of a training school in 2008.
The Standard & Poor’s 500 Index rose 0.1 percent this week, climbing for a seventh week in the longest stretch of gains since January 2011. The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., climbed 1.2 percent this week to $40.32, the highest level since Feb. 6.
The decline in Chinese stocks listed in the U.S. is a “healthy correction” after the equities rallied about 8 percent over December and January, Bank am Bellevue’s Ogram said. “I don’t expect a huge slump overall.”
The Hang Seng China Enterprises Index of Hong Kong-traded stocks added 1.7 percent to 11,845.20 over the two days that the market was open after the holiday. The iShares FTSE A50 China Index ETF, which tracks the mainland stocks, gained 0.7 percent in Hong Kong.
Mainland stocks will probably rally Feb. 18 to catch up with the gains in Hong Kong, Steven Leung, an institutional sales director at UOB Kay Hian Ltd. based in the city, said by phone yesterday.
New home prices in China rose 1 percent in January, the biggest increase since January 2011, SouFun Holdings Ltd., the country’s biggest real estate website owner, said Feb. 1.
Some of China’s largest cities may curb sales approvals for housing projects in in the first half to tame price-growth “momentum,” the China Securities Journal reported Feb. 7, without citing anyone. First-tier cities, including Beijing, will institute new restrictions on the market, according to a Feb. 6 Shanghai Securities News report, which cited an unidentified person close to the city’s housing commission.
Sales at shops and restaurants during the New Year holiday increased 15 percent from a year earlier, from a 16 percent growth in 2012, China’s Commerce Ministry said on its website today. The People’s Bank of China hasn’t cut key rates since July and last reduced banks’ reserve requirements in May.
LDK Solar’s ADRs surged 21 percent to $1.88 in the U.S. this week, the steepest advance in a month. Suntech Power Holdings Co., the biggest solar-panel maker globally, climbed 6.2 percent to $1.54 in the week.
Wacker Chemie AG, a Munich-based polysilicon producer, said Feb. 11 that it’s boosting output as orders from solar makers exceed production. Polysilicon prices rose above $16 per kilogram for the first time in three months, according to a Bloomberg Industries report Feb. 7.
Pavel Molchanov, an analyst at Raymond James & Associates Inc. who rates Suntech equivalent to “sell,” said the gains in Chinese solar companies may be short-lived because there’s still a glut of supply in the market.
“It’s a junk rally,” Molchanov said by phone from Houston yesterday.
China, the world’s biggest supplier of solar modules, has provided subsidies and assistance to manufacturers as European nations cut back on aid for alternative energy. LDK has slumped 66 percent in the past year, while Suntech is down 55 percent.
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