Chinese stocks climbed to the highest level in a week in New York as Suntech Power Holdings Co. (STP) extended gains on reports the company is talking to investors and Baidu Inc. (BIDU) jumped the most since July.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. rose 0.9 percent to 91.44 yesterday for a third day of gains. Suntech surged 19 percent after the China Securities Journal reported the solar manufacturer, whose main unit was forced into bankruptcy after a debt default, had been approached by potential investors. Baidu, owner of China’s biggest online search engine, rallied the most since July, while Yanzhou Coal Mining Co. (YZC) traded at the highest premium over Hong Kong shares in three months.
Suntech, which defaulted on a $541 million bond repayment last month, has soared 78 percent this week after the Hong Kong Economic Times’ news service said Warren Buffett’s MidAmerican Energy Holdings Co. was interested in buying what was once the world’s biggest solar-panel maker. 86Research Ltd. raised Baidu, down 10 percent in 2013, to buy from hold.
“Suntech’s rally is related to the market rumor that Buffett is interested in investing, according to Chinese media reports,” Tan Chiheng, an analyst at Granite Point Capital Inc. (PTCI) in Boston, which invests in Chinese equities, said by phone. “Investors are interested in Baidu due to its low valuation and the generally improving macroeconomic environment in China.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., climbed 0.5 percent to a one- week high of $36.42 yesterday. The Standard & Poor’s 500 Index added 1.2 percent to a record-high 1,587.73 amid optimism over quarterly earnings.
China’s central bank may release March data of banks’ new loans and money supply as early as today. Chinese banks may extended new loans of 900 billion yuan ($145.3 billion) last month, from 620 billion yuan in February, according to the median estimate of 34 economists surveyed by Bloomberg.
Suntech’s American depositary receipts advanced to 74 cents, the highest close in four weeks.
Referring to speculation surrounding Buffett’s MidAmerican looking to invest in the company, the China Securities Journal reported that an unidentified Suntech official didn’t deny that “the company people have been talking about” had approached the Jiangsu, China-based solar maker.
Suntech will publish an official statement in a few days, the Journal said, quoting the Suntech official.
The company is looking for buyers for some of its projects and assets, Reuters reported yesterday, citing an unidentified person with knowledge of the matter. A court in Wuxi, China, has appointed a committee to administer a restructuring that will take as long as nine months, Reuters cited the person as saying.
Baidu traded at 15.6 estimated 12-month earnings yesterday, rebounding from a record-low valuation of 14.5 reached last week, data compiled by Bloomberg show. The company’s ADRs surged 6.1 percent to $90.07 in New York, the steepest rally since July 24.
ADRs of Baidu are “attractive,” Ming Zhao, founder of 86Research wrote in a note yesterday, citing the company’s valuation. “We see mobile search as a big driver for the next five years. A number of negatives have been baked into Baidu’s shares.”
Yanzhou, China’s fourth-largest coal miner, increased for a second day, rising 2.6 percent to a one-week high of $12.92 in New York. Its ADRs, each representing 10 underlying shares in the Shandong-based company, traded 2.6 percent above shares in Hong Kong, the largest premium since Jan. 2.
Qihoo 360 Technology Co. (QIHU), owner of China’s most-used web browser, added 3.9 percent to a one-week high of $29.93 in New York.
Hollysys Automation Technologies Ltd., (HOLI) a Beijing-based control system maker, climbed 4.5 percent to $12.19, rising the most in a month. Semiconductor Manufacturing International Corp. (SMI), a Shanghai-based circuit foundry, rallied 5.4 percent to $3.12 in New York, the highest level in two months.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong rose 0.8 percent to 10,694.23 yesterday, extending a three-day rally, and the Shanghai Composite Index of domestic Chinese shares was little changed at a one-week high of 2,226.126.
Twelve-month non-deliverable forwards rose 0.28 percent to 6.2607 per dollar yesterday in New York, the biggest gain since Jan. 10, according to data compiled by Bloomberg. The currency strengthened 0.14 percent to 6.1939 per dollar in Shanghai yesterday after touching 6.1923, the strongest level since 1993, according to the China Foreign Exchange Trade System.
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