(Corrects assets under management in sixth paragraph and quote in same paragraph to show Kaufman said “plays” not “places.” Adds that the fund is underweight China, in story first published Sept. 26.)
Alibaba Group Holding Ltd.’s planned initial public offering in New York will help Chinese Internet companies from Sina Corp. to Baidu Inc. (BIDU) to extend rallies, Baron Capital Inc. said.
Alibaba, China’s biggest e-commerce company, is seeking U.S. law firms to help with an IPO after talks for a Hong Kong listing broke down following management’s proposal to keep control in a share sale, according to two people familiar with the matter. Investment banks have valued Alibaba at as much as $120 billion, which would make it the third-biggest Internet company behind Google Inc. and Amazon.com Inc. (AMZN) based on market capitalization.
“This is going to be the most important e-commerce company IPO in the world next to Amazon,” Michael Kass, a New York-based portfolio manager at Baron Capital Inc., which manages $20 billion in assets including emerging-market stocks, said by phone. “Look at Baidu and Sina, and Ctrip and all the leading China Internet companies, and investors’ interest is being rekindled in those companies.”
Sina, owner of the Twitter-like Weibo in which Alibaba acquired an 18 percent stake in April, has jumped 64 percent this year. Baidu, China’s most-used search engine, has gained 50 percent while online fashion retailer Vipshop Holdings Ltd. extended its surge to 227 percent. The Bloomberg China-US Equity Index (HSCEI) of the most-traded Chinese stocks in the U.S., poised for its best quarterly gain in three years with a 19 percent rise, added 0.4 percent to 102.2 yesterday in New York.
China’s economy could grow between 7 and 7.5 percent in 2013 and beyond, a level that “will become the new normal,” Standard & Poor’s economist Paul Gruenwald wrote in a report yesterday, adding slower expansion will make its growth more sustainable. The world’s second-largest economy expanded 7.7 percent last year and 9.3 percent in 2011.
China represents the biggest country exposure in the Thornburg Developing World Fund, portfolio manager Lewis Kaufman, whose fund has $1.28 billion of assets, said by phone yesterday from Santa Fe, New Mexico. “Consumption can continue to be the relative bright spots of the Chinese economy. The Internet and casino names are great plays on consumption,” Kaufman, who is underweight China, said.
Melco Crown Entertainment Ltd. (MPEL), a casino operator in Macau, is set for an 89 percent rally this year, the biggest annual gain in three years.
The iShares China Large-Cap ETF (FXI), the largest Chinese exchange-traded fund in the U.S., dropped 0.5 percent to $37.92 in New York. The Standard & Poor’s 500 Index slipped 0.3 percent after Wal-Mart Stores Inc. cut orders and as concern grew that a political showdown over government spending poses a threat to growth.
Ctrip.com International Ltd. (CTRP), the nation’s biggest online travel agency, jumped 8.2 percent to $55.55 in New York, the highest level since its U.S. IPO in 2003.
Deutsche Bank AG raised its recommendation on the Shanghai-based company to buy from hold, lifting a 12-month price target by 85 percent to $65. Ctrip “is rapidly emerging as a clear travel solution leader,” Vivian Hao, a Hong Kong-based analyst, wrote in a note yesterday.
Tal Education Group (XRS), an after-school tutoring service provider based in Beijing, jumped 6.3 percent to $14.88 in New York, the highest price since January 2011.
Sina added 3.9 percent to $82.50, the biggest rally in three weeks. Baidu’s ADRs advanced 0.4 percent to $150.68, the highest close since April 2012. Guangzhou-based Vipshop (VIPS) climbed 2.2 percent to $58.36, snapping a three-day retreat. E-Commerce China Dangdang Inc. (DANG), the country’s largest online book retailer, added 2.2 percent to $9.62, taking its gains this year to 132 percent.
The Hang Seng China Enterprises Index ended little changed at a one-week low of 10,598.18 yesterday, while the Shanghai Composite Index slipped 0.4 percent to 2,198.52, the lowest price in a week.
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