Chinese equities in New York fell for the first time this week, led by property stocks and state- run companies, on concern a bigger-than-estimated increase in lending will spur the central bank to tighten credit.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. fell from a six-day high, losing 1.1 percent to 90.42. SouFun Holdings Ltd. (SFUN), owner of China’s biggest real estate website, dropped 5.4 percent, while government-backed Yanzhou Coal Mining Co. (YZC) sank the most since October. China Unicom (Hong Kong) Ltd. and China Telecom Corp. (CHA), slid to the lowest levels since July.
Chinese banks issued 1.06 trillion yuan ($171 billion) of new loans in March, exceeding the 900 billion-yuan median of 34 economists’ forecasts. Money supply also grew 15.7 percent last month. Policy makers may tighten monetary policy to contain the debt buildup, Nomura Holdings Inc. said in a report yesterday. Expansion in Asia’s biggest economy quickened to 7.9 percent in the final three months of 2012 after a seven-quarter slowdown.
“The market interprets these data as too much liquidity being put into the market, which may be followed by some tightening to prevent real estate prices from going higher,” Elena Ogram, who manages $50 million in emerging-market assets, including Chinese stocks, at Bank am Bellevue AG in Zurich, said by e-mail. “On one hand, the economic recovery is subdued and authorities are trying to support it by extra liquidity. On the other, the extra liquidity may push real estate prices higher.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., fell 0.4 percent $36.27, retreating for the first time in three days. The Standard & Poor’s 500 Index climbed 0.4 percent to a record-high 1,593.37 amid a bigger-than-estimated drop in weekly U.S. jobless claims.
SouFun’s American depositary receipts tumbled to $22.38 after rallying over the previous two days. E-House China Holdings Ltd. (EJ), a property agent based in Shanghai, slid 2.5 percent to $4.27, sinking the most in a week.
China’s new home prices climbed for the 10th month in March, rising 1.1 percent from February, the biggest gain in more than two years, SouFun said April 1 after surveying 100 cities. Buyers rushed into the market last month before local governments started to implement detailed property curbs to limit gains in home prices.
Aggregate financing, a broader measure of credit that includes non-bank lending such as trust loans, bond and stock sales, was 2.54 trillion yuan in March, close to a record, compared with the median analyst estimate of 1.8 trillion yuan, according to data released by China’s central bank yesterday.
Fitch Ratings lowered its assessment April 9 of China’s long-term yuan debt by one step to A+, the fifth-highest grade, saying there are increasing financial-stability risks given the lack of transparency in the increased borrowing by local governments.
“We would expect further policy announcements to reflect a greater desire by the central government to exert more control over the non-bank lending sector,” Tony Hann, head of emerging- market equities at Blackfriars Asset Management Ltd., said by e- mail yesterday.
Yanzhou, China’s fourth-largest coal producer, slid 4.7 percent to $12.31 in New York, the steepest slump since October. The company’s ADRs traded 0.8 percent below its Hong Kong shares, the first discount this week, data compiled by Bloomberg show. China Life Insurance Co., the nation’s biggest insurer, slipped 2.8 percent to $39.58 in the first retreat in four days. Its ADRs traded at a 0.6 percent discount to the stock in Hong Kong.
China Telecom’s ADRs sank 2 percent to $48.87, the lowest price in almost nine months, while China Unicom lost 1.8 percent to $12.85, the lowest level since July 18.
Yongye International Inc. (YONG), a Beijing-based fertilizer company, said yesterday it is corresponding with Nasdaq over its 2012 annual report and the status of its privatization bid. Yongye’s shares have been halted in New York since March 18 and will remain suspended until Nasdaq is fully satisfied with the information provided by the company, according to a PRNewswire statement.
Yongye has lost 8.8 percent in 2013 before trading was halted.
Suntech Power Holdings Co. (STP), a solar-panel maker based in Wuxi, China, surged a fourth day, rising 18 percent to a four- week high of 87 cents. While the company had the biggest gain on the Bloomberg China-US gauge and is up 107 percent this week, it is still down 54 percent from this year's high reached Jan. 4. Baoding-based solar maker Yingli Green Energy Holding Co. added 0.9 percent to $2.17 yesterday.
The Bloomberg Industries Large Solar Index (BISOLAR) -- which tracks 17 solar companies including Tempe, Arizona-based First Solar Inc., Sandvika, Norway-based Renewable Energy Corp. and Suntech -- rose 2.4 percent yesterday to the highest level in a month.
Suntech, whose main unit was forced into bankruptcy after defaulting on a $541 million bond repayment last month, said April 10 that judicial authorities in Schaffhausen, Switzerland, granted the company’s principal European unit a moratorium for two months on creditor claims.
The stock jumped 16 percent April 8 after a news service owned by Hong Kong Economic Times said Warren Buffett’s MidAmerican Energy Holdings Co. may buy the solar panel maker, citing an unidentified person. Tina Potthoff, a spokeswoman for MidAmerican in Des Moines, Iowa, said by e-mail that it doesn't comment on speculation. Shashin Surti, a spokesman for Suntech, said it also doesn't comment on speculation by e-mail April 9.
“I don’t know why MidAmerican would want to buy a Chinese solar manufacturer, that makes absolutely no sense, especially one that has the problems that Suntech has,” Alex Morris, an energy analyst at Raymond James & Associates Inc. said by phone from Houston yesterday. Raymond James dropped coverage of Suntech last month before its bond default, Morris said.
Trading volumes for Suntech were more than four times the daily average over the past three months today, data compiled by Bloomberg show.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong added 0.1 percent to 10,708.25 yesterday, extending a four-day rally, while the Shanghai Composite Index of domestic Chinese shares dropped 0.3 percent to 2,219.55 in its first decline in three days.
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