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Spreadtrum Leads ADRs Rally on U.S. Data: China Overnight

Chinese stocks rose for the first time in three days in New York, led by Spreadtrum Communications Inc. (SPRD), as better-than forecast U.S. economic data outweighed concern that a slowdown in Asia’s biggest economy will deepen.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. advanced 0.8 percent to 87.96, rebounding from the lowest level since April. Spreadtrum jumped the most in four months after the Shanghai-based mobile-chip designer boosted its sales forecast, while China Southern Airlines Co. (CEA) traded at the highest premium over Hong Kong stock in a year. China Eastern Airlines Corp. rose after a four-day slump, while 21Vianet Group Inc. surged to a seven-month high.

Retail sales in the U.S., China’s largest export market in 2012, rose 0.6 percent last month, the biggest increase in three months, Commerce Department figures showed yesterday. That compared with a 0.4 percent median forecast of economists surveyed by Bloomberg. Morgan Stanley yesterday lowered its estimate for China’s 2013 gross domestic product growth to 7.6 percent from 8.2 percent, joining UBS AG, Royal Bank of Scotland Group Plc and Barclays Plc in lowering the forecasts.

“The U.S. economic recovery is good news for China as well as the global economy,” Tan Chiheng, an analyst at Granite Point Capital Inc. in Boston, which invests in Chinese equities, said in a telephone interview. “Chinese stocks traded in Hong Kong may open higher because of the U.S. optimism today.”

ETF Climbs

The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., advanced 1 percent to $34.94, rebounding from the lowest level since September. The Standard and Poor’s 500 Index surged 1.5 percent to 1,636.36, rising for the first time in four days.

Spreadtrum said second-quarter sales will rise as much as 61 percent from a year earlier to $278 million, raising its forecast from $228 million, according to its statement yesterday. The company also expected gross margins to improve.

The higher revenue estimate was “due to the continuing strong demand throughout the quarter for low-cost smartphones,” Chief Executive Officer Leo Li said, according to the statement.

Spreadtrum’s American depositary receipts jumped 11 percent to $20.97, the biggest advance since February. Its ADRs had dropped 7.7 percent this quarter before yesterday’s rally, as a May 20 data release from China Mobile Ltd. showed the nation’s biggest phone company added fewer third-generation subscribers in April.

Selloff ‘Unwarranted’

The selloff triggered by concern that China Mobile’s subscriber growth may be slowing was “unwarranted,” Jay Srivatsa, an analyst at Chardan Capital Markets LLC in New York, wrote in a note yesterday. “Spreadtrum’s raising guidance for the second quarter suggests otherwise.”

China Southern, Asia’s biggest carrier by passenger numbers, surged 4.4 percent to $22.21, jumping the most since April 16. Its ADRs, each representing 50 underlying shares in the Guangzhou-based company, traded 4.2 percent above stocks traded in Hong Kong, the widest premium since June 2012.

China Eastern, the nation’s second-biggest carrier, climbed 3.4 percent to $15.74 for the steepest gain in two months.

Total passengers increased 8 percent in May from a year earlier, compared with a 5.9 percent growth in April, according to data from the Shanghai-based company yesterday.

21Vianet, operator of the largest private Internet-data center in China, climbed 3.3 percent in its ninth day of gains, the longest stretch of advances on record. It reached $11.35, the highest level since Nov. 2.

Phoenix New Media, a Beijing-based Internet, TV and mobile-news provider, tumbled 12 percent to $5.10 for the largest daily loss since November 2011. The company had the biggest decline on the China-US gauge.

A 11-day slump in the Hang Seng China enterprises Index in Hong Kong, the longest in 17 years, sent it to the lowest level since Sept. 26. The Shanghai Composite Index (SHCOMP) tumbled 2.8 percent to 2,148.36 for the biggest loss in three months as trading resumed after a public holiday.

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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