Chinese equities rose in New York, driven by Trina Solar Ltd. (TSL) and Yingli (YGE) Green Energy Holding Co. on speculation investors are favoring solar makers with sufficient cash after Suntech Power Holdings Co. (STP) defaulted.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. added 0.2 percent to 90.53 yesterday. Trina gained the most in two weeks and Yingli rebounded from a four-month low. SouFun Holdings Ltd. (SFUN), owner of China’s biggest real estate information website, jumped the most in five weeks, while Suntech sank after a two-day advance.
Trina had $807 million in cash by the end of 2012, while Yingli had a cash balance of $490 million, according to data compiled by Bloomberg. Suntech was forced by eight banks into bankruptcy last month after defaulting on $541 million of convertible bonds due March 15. A global supply glut and cuts to government subsidies for alternative energy in Europe has spurred losses for Chinese solar manufacturers since 2011.
“The ones that are really at risk are the ones that have significant U.S. debt coming due, like Suntech,” Gordon Johnson, an analyst at Axiom Capital Management Inc. said by phone in New York. “Trina and Yingli have enough cash to meet their liabilities in convertible debt.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., climbed 0.3 percent to $35.97 in New York, and the Standard & Poor’s 500 Index (SPX) advanced 0.4 percent to 1,559.98.
Trina, based in Changzhou, China, rallied 2.5 percent to $3.67, trimming its loss this year to 15 percent. Yingli, the world’s biggest solar panel maker by shipments, added 1.2 percent to $1.72, paring its 2013 loss to 27 percent.
Suntech dropped 2.3 percent to 42 cents in New York. The stock has lost 40 percent since the default. LDK Solar Co., a Xinyu-based maker of solar wafers which had $3.1 billion of debt at the end of the third quarter, has slumped 25 percent.
A team managing Suntech’s insolvency is expected to finish debt registration for almost 400 creditors and a review of the company’s assets by the end of this month, the Beijing News reported yesterday, citing Wuxi Municipal Intermediate People’s Court, which accepted a bankruptcy petition for Suntech’s main unit by eight banks March 20. A creditors’ meeting will also be called, according to the report.
“All Chinese solar companies are pretty much in the same boat and they can’t continue service without loans from Chinese banks because they are losing money,” said Axiom Capital’s Johnson.
SouFun rose 6.9 percent to $23.66 in New York, posting the biggest advance on the China-U.S. gauge. The Beijing-based company dropped as much as 5.5 percent earlier in the day after Glaucus Research Group California LLC said the stock was a “strong sell.”
“The short-selling piece by Glaucus has caused volatility in SouFun’s stock,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages about $700 million of investments including Chinese stocks, said by e-mail from Lisle, Illinois. “The bigger issue is that the property measures by local governments weren’t as terrible as thought.”
Thirty-day volatility on SouFun’s stock surged to 69 yesterday, the highest level since June. It compares with an average of 51.5 over the past year.
Online fashion retailer Vipshop Holdings Ltd. (VIPS) gained 3 percent to $30.53, the highest level in a week. NQ Mobile Inc. (NQ), which provides mobile security services, jumped 4.7 percent to $8.61, the biggest one-day rally since March 18.
Stock markets in mainland China and Hong Kong were closed for a public holiday yesterday. Mainland markets remain shut today.
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