Chinese equities retreated to a one-week low in New York as Federal Reserve minutes signaled it will reduce bond buying if the economy improves. 21Vianet Group Inc. (VNET) plunged the most in a year.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. fell 0.8 percent to 95.3 yesterday 21Vianet, a data-center operator, slid 7.1 percent after failing to surpass analysts’ earnings projections. China Unicom (CHU) (Hong Kong) Ltd. sank the most in two months and American depositary receipts of Huaneng Power International Inc. (902) traded below the Hong Kong stock for an eighth day. Trina Solar Ltd. (TSL) jumped after boosting its outlook for panel shipments this year.
Chinese ADRs followed emerging markets lower after Fed minutes of its July meeting showed officials supported tapering its bonds purchase this year if the economy improves. The China-US gauge has rallied 17 percent since June 24, when concern of cash shortage and slower economic growth sent the index to a 20-month low.
“If you do see the Fed begin to slow its bond purchasing, it will be negative for money flows out of the emerging markets,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million of assets, said by phone yesterday from Lisle, Illinois. “Some of the Chinese names may sell off after strong rallies.”
The iShares China Large-Cap ETF (FXI), the largest Chinese exchange-traded fund in the U.S., dropped 2 percent to $34.85, slumping the most in five weeks. The Standard & Poor’s 500 Index fell 0.6 percent after the Fed published minutes of its July 30-31 meeting.
21Vianet’s American depositary receipts sank to $13, the lowest level this month. Trading volume was triple the 90-day average, data compiled by Bloomberg showed. The slump cut its rally this year to 35 percent.
Beijing-based 21Vianet, which started a partnership in May with Microsoft Corp. to offer cloud services in China, provided third-quarter revenue forecast of $83 million to $85 million Aug. 20, compared with an average of $84.6 million of four analysts compiled by Bloomberg. Sales rose 29 percent to $76.8 million in April-June, while analysts had projected $76.3 million on average.
“Maybe there wasn’t enough upside relative to expectations as it is heading into the cloud service offering with Microsoft,” Todd Weller, an analyst at Stifel Nicolaus & Co., said by phone from Baltimore yesterday. “The stock had a pretty big run in the last several months mainly thanks to improved sentiment on China’s Internet stocks.”
Huaneng, China’s biggest electricity producer, slumped 3.8 percent to $38.80, the lowest price since July 8. The ADRs, each representing 40 underlying shares in Huaneng, traded 0.8 percent below its Hong Kong shares on its eighth day of discounts.
Online fashion retailer Vipshop Holdings Ltd. (VIPS) dropped for a second day, sinking 4.4 percent to $39.56. Beijing-based e-commerce company LightInTheBox Holding Co., which tumbled 40 percent Aug. 20 after its forecast a drop in third-quarter sales from the previous three months, declined 4 percent to $11.12 in New York, the lowest since its initial public offering in June.
Trina, China’s third-largest solar panel maker, jumped 15 percent to $8.97 in New York, extending its gains over the past two days to 32 percent, the biggest two-day rally in 18 months.
The company increased its shipments forecast this year by as much as 20 percent, according to its statement Aug. 20. Solar manufacturers SunPower Corp. (SPWR) and JinkoSolar Holding Co. said they’re also running their factories at maximum and mulling ways to boost output.
Rising demand in Asia is soaking up the capacity surplus in the industry and will prompt the biggest producers to expand factories, said Angelo Zino, an analyst at Standard & Poor’s in New York.
The Hang Seng China Enterprises Index retreated 0.5 percent to 9,856.86 in a third day of declines. The Shanghai Composite Index (SHCOMP) was little changed at 2,072.96.
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