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Sohu Leads Drop as Trina Gains on Tariff: China Overnight

Sohu.com Inc. (SOHU) led Chinese equities traded in New York lower on speculation Internet companies’ gains over the past few weeks were excessive, as Trina Solar Ltd. (TSL) rose after the European Union announced tariffs that were smaller than analysts expected.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. slid 0.3 percent to 90.37. Sohu, owner of China’s third-largest Web portal, sank to a two-week low and search-engine operator Qihoo 360 Technology Co. (QIHU) slipped for a third day. Trina, China’s third-largest panel maker, advanced as Yanzhou Coal Mining Co. fell to the lowest price in four years after its rating was cut to sell by Bank of China Ltd.

Sohu surged 25 percent in May, the best monthly advance since October 2011, amid reports it may buy a Chinese video website. Qihoo jumped 28 percent last month. The EU decided to impose tariffs on solar panels from China, with an initial rate of 11.8 percent taking effect tomorrow. The levies will rise to an average 47.6 percent after two months unless an accord is reached, EU Commissioner Karel De Gucht said yesterday.

“It’s not a surprise for us to see some consolidation in Internet names because they had nice big rally over the past few weeks,” Henry Guo, a senior analyst at ABR Investment Strategy LLC in San Francisco, said in a telephone interview. “It looks like Qihoo’s share of the online search market has stabilized, as some data showed today, and the growth rate may not be as fast as some investors had expected.”

ETF Retreats

The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., slid 1 percent in New York to $36.18, after surging 1.5 percent the previous day. The Standard and Poor’s 500 Index fell 0.6 percent to 1,631.38 as economists said the Federal Reserve may scale back its stimulus efforts as early as September.

Shares of Sohu slipped 3.1 percent to $61.59 amid trading volumes that were 49 percent higher than the daily average over the past three months. The Beijing-based company is looking to buy larger video websites to provide content, Chairman and Chief Executive Officer Charles Zhang said in an interview last month.

A deal “may come soon, and I expect its video business to seek a partnership to survive the fierce competition in the sector,” Guo said.

Qihoo, based in Beijing, China, slipped 2.3 percent to $42.21. Its stretch of declines is the longest in two months.

The company’s browser saw a slight loss in market share in May, 86Research Ltd., a Hong Kong-based equity-research firm, said in a note to clients yesterday.

Coal Mining

Yanzhou, the fourth-biggest coal mining company in China, retreated 2.6 percent to $9.95, the lowest price since May 2009. The company was removed from the FTSE China A50 Index and was cut to sell from hold by equity analyst Lawrence Lau on June 3.

Trina’s American depositary receipts climbed 2.2 percent to $6.13 in the second day of advances.

“The EU tariff was better than expected, as the starting 11.8 percent was less than previous rumors, which had anywhere between 40 percent to 60 percent,” Gordon Johnson, an analyst at Axiom Capital Management Inc. in New York, said by phone. “I actually think the tariffs will be kept the same because the EU has far more trade exposure to China than China has to the EU. If the EU would implement significant restrictions on China’s solar industry, there definitely would be retaliations from China, and China has the upper hand in the discussion.”

Price Curbs

E-House China Holdings Ltd. (EJ), a real estate agency based in Shanghai, slid 2.5 percent to $4.77, extending its slide to a second day.

China’s new home prices jumped in May by the most since they reversed declines in December, Beijing-based SouFun said in a June 3 statement after a survey of 100 cities. The prices surged 6.9 percent from a year earlier and rose 0.8 percent from April, the 12th month of gains on a month-on-month basis, SouFun’s data showed.

The city of Beijing will need to adopt further property tightening measures as officials struggle to meet this year’s target of keeping prices unchanged from last year, said Bacic & 5i5j Group, the city’s second-biggest property broker.

The Shanghai Composite Index (SHCOMP) of domestic Chinese shares sank 1.2 percent to 2,272.42, retreating the most in a month. The Hang Seng China Enterprises Index (HSCEI) in Hong Kong fell 0.1 percent to 10,537.49, the lowest price since April 23.

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

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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