Chinese equities climbed to a 12-week high in New York as Phoenix New Media Ltd. (FENG) rallied before posting second-quarter earnings, while signs of economic stabilization drove a rebound in Yanzhou Coal Mining Co.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. increased 1.8 percent to 96.01 yesterday, the highest level since May 21. Phoenix, an Internet and TV media outlet, advanced to a two-year high. Yanzhou surged the most since 2011, while E-House China Holdings Ltd. (EJ) jumped 29 percent amid speculation that policy makers will ease curbs on real estate fundraising.
Analysts had estimated second-quarter sales at companies from Sina Corp. to Home Inns & Hotels Management Inc. (HMIN) and Phoenix rose at least 11 percent before their releases, according to data compiled by Bloomberg. China’s central bank said on Aug. 9 that new yuan loans topped estimates last month, following a government report that factory output accelerated in July and trade growth exceeded estimates.
“It looks like things in China are normalizing,” Elena Ogram, who holds Chinese stocks in her $50 million emerging-market portfolio at Bank Bellevue AG, said by e-mail from Zurich yesterday. “Investors start to realize that most likely the hard landing scenario isn’t the base-case scenario.”
The iShares China Large-Cap ETF (FXI), the largest Chinese exchange-traded fund in the U.S., climbed 3.2 percent to a two-month high of $35.65. The Standard & Poor’s 500 Index retreated 0.1 percent amid data showing Japan’s economic growth slowed last quarter and investors awaited tomorrow’s report on America’s retail sales.
Phoenix jumped 14 percent in its sixth day of advances to $8.22, the highest level since August 2011. Trading volume was more than quadruple the daily average over the past year, data compiled by Bloomberg showed.
The Beijing-based company said in a May statement it expected second-quarter sales to climb to as much as 341 million yuan ($62 million), which would represent a 20 percent growth from a year earlier.
E-House, a Shanghai-based real estate brokerage, soared 29 percent to $6 in New York, the highest close since May 2012. Volume was almost nine times the daily average over the past three months.
Analysts at Zheshang Securities Co. and Mizuho Securities Asia Ltd. said China’s regulators were moving toward easing curbs on real estate fundraising, after an Aug. 9 statement issued by the nation’s securities regulator elaborated on conditions for allowing financing by developers.
“Developers in China are being allowed to raise funds again, adding another positive sign to the industry’s growth outlook,” Ella Ji, an analyst at Oppenheimer & Co. in New York, said by e-mail today. “We anticipate EJ will report solid 2Q results” on Aug. 16.
Sina rose 2.9 percent to $80.35, the highest close since November 2011. The Shanghai-based company may report second-quarter sales increased 15 percent and adjusted net income more than double, according to the average estimate of at least six analysts compiled by Bloomberg before the company’s report.
Home Inns, operator of China’s biggest budget hotel chain, climbed 0.4 percent to $29.17, extending gains into a third day. Sales at the Shanghai-based company may expand 11 percent for April-June while profit may grow 30 percent, the mean estimate of four analysts surveyed by Bloomberg showed.
Yanzhou’s American depositary receipts surged to $8.45 in the steepest rally since October 2011. The ADRs have climbed 24 percent in the past three days, the biggest gain since May 2009.
Economic data since Aug. 9 have eased fear of hard landing risk, supporting coal stocks, Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd., said by phone yesterday. Coal stocks are undervalued and have priced in downside earnings risks in 2013 and 2014, she said.
LDK Solar Co. advanced 5.7 percent to $1.66 for a three-day rally after President Tong Xingxue said in an interview in Xinyu that the solar maker may return to profit this year. Domestic demand has increased and a tariff deal with Europe indicates better sales in Europe, he said.
China Life Insurance Co. (2628), the nation’s largest insurer, surged 4.4 percent to a two-month high of $37.45 in New York.
Policy makers will expand the industries in which insurers can invest as debtholders, the nation’s Caixin New Century Magazine reported, citing an interview with Xiang Junbo, head of the China Insurance Regulatory Commission. Annualized return for insurance assets was 4.98 percent in the first half, compared with 3.56 percent in the same period a year ago, Xiang said, according to the report.
The Hang Seng China Enterprises Index in Hong Kong surged 3.4 percent to a two-month high of 9,928.04 after a third day of rally. The Shanghai Composite Index (SHCOMP) climbed 2.4 percent to 2,101.28, rising the most in a month.
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