NQ Tumbles as Investment Data Sink ADRs: China Overnight

Chinese stocks fell for the first time in three days in New York, led by NQ Mobile Inc. (NQ) and NetEase Inc. (NTES), on concern slowing foreign investment will delay a rebound in the world’s second-largest economy.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. slipped 1 percent to 94.39 yesterday. NQ, a Beijing-based mobile security software developer, tumbled the most in two months after saying first-quarter net income dropped from the previous three months. Web games owner NetEase Inc. retreated from a 10-month high, while China Mobile Ltd. (CHL) traded at the biggest discount to Hong Kong shares in a month.

Foreign direct investment in China rose 0.4 percent in April, below analysts estimates and down from the 5.7 percent gain in March, government data yesterday showed. Bank of America Corp. and JPMorgan Chase & Co. cut 2013 growth estimates for China this week to 7.6 percent after April industrial production and investment data trailed projections. The China-US gauge has slumped 1.8 percent this week, compared with a 1 percent advance in the Standard & Poor’s 500 Index. (SPX)

“The data so far points to a very sluggish growth recovery,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by e-mail. “It means the equity market will continue to struggle. It’s hard to see where the catalysts are for a big rally unless the market gets technically very oversold.”

The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., dropped 0.6 percent in New York to a two-week low of $37.54. The S&P 500 slipped 0.5 percent to 1,650.47.

NQ Sinks

NQ Mobile’s American depositary receipts plunged 7.5 percent to $8.88, extending a two-day slump after reaching a two-month high of $9.70 on May 14.

The company’s first-quarter net income rose 30 percent from a year earlier to $2.9 million, below the $4.2 million average estimate of four analysts compiled by Bloomberg, and compared with $4.9 million in the previous three months. The company raised its sales forecast for 2013 to as much as $184 million from the previous $183 million.

“Even though the company beat a little and raised guidance slightly higher, people expected a little more,” Jun Zhang, an analyst at Wedge Partners Corp., said by e-mail yesterday.

NetEase, the operator of China’s second-largest online games website, fell 3.9 percent to $58.07 after rising to $60.42 on May 15, the highest level since July 5.

China Mobile

The Beijing-based company said first-quarter earnings were $1.32 per ADR, compared with the $1.21 mean estimate of three analysts surveyed by Bloomberg. The company’s board also approved a plan to pay annual dividends as much as 25 percent of its “anticipated net income after tax” starting in 2013.

ADRs of China Mobile, the nation’s biggest wireless carrier, dropped 1.8 percent to $54.94 in New York. The ADRs, each representing five underlying shares in the Hong Kong-based company, traded 0.5 percent below its Hong Kong stock, the widest discount since April 17.

Tencent Holdings Ltd., China’s largest Internet company, reported May 15 that WeChat, its instant messaging application, had 194.4 million active user accounts. Text messaging revenue for China Mobile, its most profitable business, fell 4.8 percent last year.

E-Commerce China Dangdang Inc. (DANG), the biggest Internet book retailer known as Dangdang, jumped 3.8 percent to $5.13.

Dwindling Loss

Net loss at the Beijing-based company narrowed to $11.7 million in the first quarter, according to its statement yesterday. Six analysts surveyed by Bloomberg had predicted an average loss of $15.6 million. Dangdang forecast second-quarter sales to be about $260 million, higher than the $240.1 million estimated by analysts.

Vipshop Holdings Ltd. (VIPS), a Guangzhou-based online fashion retailer, jumped 4.3 percent to $33.18. The advance boosted its surge this year to 86 percent.

The Hang Seng China Enterprises Index (HSCEI) in Hong Kong lost 0.6 percent to 11,019.48 yesterday. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares climbed 1.2 percent to 2,251.81, rising for a second day.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

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