Chinese equities in New York climbed from the lowest level since September, led by gains in Spreadtrum Communications Inc. (SPRD), after Bank of America Corp. said rising smartphone use will boost Asian semiconductor makers.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese stocks in the U.S. rose 0.2 percent to 86.65 in New York. Spreadtrum, a mobile-chipmaker based in Shanghai, jumped to the highest level since November as Bank of America recommended buying semiconductor stocks. Sohu.com Inc. (SOHU) rallied the most in six weeks while NQ Mobile (NQ) Inc. slipped to the lowest level since March 4.
Spreadtrum has surged 24 percent in 2013 as analysts project that expanding demand for low-cost, third-generation smartphones in China will stoke the biggest increase in quarterly sales in a year. The three main Chinese telecommunications providers reported higher-than-expected quarterly earnings last month as demand for smartphones grows in Asia’s biggest economy.
“The expansion of low-cost smartphones is hugely beneficial to Spreadtrum,” Jay Srivatsa, an analyst at Chardan Capital Markets LLC in New York, who upgraded Spreadtrum to buy last month, said by phone. “The 3-G smartphone demand in China is very strong. My sense is that the company will report earnings at or above guidance.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., rose 0.3 percent to $34.93 in New York, after tumbling to $34.83 April 17, the lowest since September. The Standard & Poor’s 500 Index slipped for a second day, losing 0.7 percent to 1,541.61, as data on leading economic indicators and Philadelphia-area manufacturing trailed estimates.
Spreadtrum jumped 3.8 percent to $21.90, the highest since Nov. 1. Bank of America analysts led by Daniel Heyler said Spreadtrum is among their top picks as investors underestimated the growth potential of the smartphone markets in China and developing countries.
The company is expected to report first-quarter sales rose 14 percent from a year earlier to $183 million. Adjusted earnings fell to 40 cents per share, compared with 47 cents in the year-ago period, according to the average forecast of six analysts surveyed by Bloomberg.
Sohu, the Beijing-based owner of China’s second-largest online video site, added 3.4 percent to $48.60, the highest since March 28.
The company will provide pre-installed video applications to all mobile devices of Samsung Electronics Co. (005930) sold in China, Shanghai Daily reported, without saying where it obtained the information. The agreement may cover 150 million users, it reported.
LDK Solar Ltd. (LDK), once the world’s second-biggest maker of wafers used in solar panels, slipped 2.8 percent to $1.05. Chairman Peng Xiaofeng and his management team said during a conference call that they were in talks to take on an equity investor and were close to sealing a 2 billion yuan ($320 million) credit line.
LDK cut its capacity to make cells by 89 percent and fired more than a quarter of its workforce as cash reserves fell to $98.3 million, the lowest in three years. The company reported its seventh consecutive loss in the fourth quarter.
Suntech Power Holdings Ltd., a solar company whose main unit was forced into bankruptcy after defaulting on a bond payment last month, tumbled 5.1 percent to 65 cents, leading declines on the Bloomberg US-China gauge.
China Mobile Ltd. (941), the world’s largest phone company by users, rose 0.8 percent to $52.19.
The company terminated a $596 million agreement to buy 12 percent of Far EasTone Telecommunications Co., which would have been the first investment by a Chinese state-owned company in Taiwan in six decades, after the island’s regulators wouldn’t ease ownership curbs. The deal was replaced by a framework for business cooperation and the carriers may resume talks if the ownership restriction eases, the two companies said in a joint statement yesterday.
Beijing-based NQ Mobile, the nation’s biggest mobile-phone security company, fell 3 percent to $8.07, declining for the third time in four days.
LightInTheBox Holding Ltd., a Beijing-based online retailer, applied for an initial public offering on the New York Stock Exchange April 17, aiming to raise $86 million.
Only three China-based companies listed in the U.S. last year, down from a peak of 42 in 2010, Bloomberg data show. YY Inc. (YY), a Guangzhou-based company that runs an online social network, raised $82 million in November, following the listing of Acquity Group Ltd. (AQ), a Hong Kong-based online marketing firm, in April and Vipshop Holdings Ltd. (VIPS), a Guangzhou-based online retailer, in March.
LightInTheBox, which sells clothing and electronics online, posted $200 million in revenue and net loss of $4.2 million last year, according to the filing.
China may expand the range that the yuan is allowed to trade within during the Group of 20 nations meetings in Washington this week, UBS analysts Manik Narain and Geoffrey Yu wrote in a note yesterday. Central bank Deputy Governor Yi Gang said during the International Monetary Fund meeting April 17 that the yuan’s trading band will be widened “in the near future.”
Twelve-month non-deliverable forwards on the yuan climbed 0.1 percent to 6.248 per dollar, suggesting traders expect the yuan to be little changed in a year, data compiled by Bloomberg show.
The Shanghai Composite Index of domestic Chinese shares added 0.2 percent to 2,197.60, while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong retreated 0.3 percent to 10,266.59, the lowest since Nov. 20.
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