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Chinese equities fell for the first time in three days in New York as a Communist Party meeting failed to produce the details to a planned policy shift that investors sought.
The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. slumped 0.6 percent to 101.15 yesterday, snapping a two-day rally. NQ Mobile Inc. (NQ), which Muddy Waters LLC accused of inflating revenue, slid in after hours trading after posting posted third-quarter profit that beat estimates. Yingli Green Energy Holding Co. (YGE), the largest solar maker, tumbled 11 percent after reporting a wider-than-estimated loss for the third quarter.
China elevated the role of markets in the nation’s economic strategy after President Xi Jinping oversaw a gathering of Communist Party leaders while stopping short for now of providing details on policy shifts. The document from the third full meeting of the party’s 18th Central Committee didn’t discuss specific issues such as regional borrowing, interest rates or the one-child policy, while referring generally to giving farmers more property rights.
“I would imagine some slight disappointment and that could translate into marginally low bond yields and stock prices,” Eric Lascelles, chief economist at Toronto-based RBC Global Asset Management Inc., which oversees about $280 billion, said by phone yesterday. “It’s a very lightweight document, it doesn’t get into the details and there are many questions left unanswered. The idea that we are going to get all these changes tomorrow is unrealistic.”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., dropped 0.9 percent to $36.90 after a two-day advance. The Standard & Poor’s 500 Index slipped 0.2 percent as investors speculated on the timing of any reduction to Federal Reserve stimulus.
China will make markets “decisive” in allocating resources, according to a statement published by the official Xinhua News Agency after a four-day meeting. At the same time, the state will remain “dominant” in the economy, indicating limits on reducing government involvement.
“There’s nothing that has exceeded expectations,” according to Dai Ming, fund manager at Hengsheng Hongding Asset Management. “The lack of details will pressure the market.”
More policy details will come next week, said Gabriel Wallach, chief investment officer at BNP Paribas Investment Partners in Boston. “It is disappointing only because there are no major announcements on SOE reform,” or state-owned enterprises, Wallach said in e-mailed comment yesterday.
The nation’s state media had heralded the meeting as a “watershed” event. Chinese Politburo member Yu Zhengsheng said reforms to be discussed at the meeting would be “unprecedented,” Xinhua News Agency reported on Oct. 26.
“In the coming weeks, there’s going to be more of a focus on how do we develop the consumer, how do we take a little bit more of the focus to the service side of the economy to improve the lifestyle of the middle-class there,” Michael Strauss, chief investment strategist and chief economist at Commonfund Group in Wilton, Connecticut, said by phone. Strauss helps oversee about $25 billion of assets.
All of the reforms that people had hoped from the meeting in areas, including financial liberalization, state-owned enterprises and labor mobility “may still be on the table, and they seem to reference doing that in increasing the size and role of markets,” RBC’s Lascelles said.
American depositary receipts of NQ Mobile fell 6 percent to $13.45 as of 5:52 p.m. after closing at $14.31. The company has plunged about 40 percent since Oct. 24 when Muddy Waters, the research firm founded by short seller Carson Block, initiated coverage with a strong sell rating. NQ Mobile, which has headquarters in Beijing and Dallas, has denied the allegations.
In a separate statement yesterday, NQ Mobile said that its senior management, including co-Chief Executive Officers Omar Khan and Henry Lin and President Zemin Xu, will purchase $3 million of American depositary shares with their personal funds in the next six months.
Sina Corp. (SINA), owner of China’s largest Twitter-like service, posted third-quarter profit that surpassed analysts’ estimates after new mobile services helped lure more advertising. Its shares climbed 3.5 percent to $78.60 at 5:45 p.m.
Yingli’s ADRs plunged 11 percent to $6.23, the biggest slump since Oct. 25. The Baoding-based Chinese solar maker reported adjusted net loss of 24 cents for the third quarter, wider than the 22-cent average estimate of five analysts compiled by Bloomberg. Trina Solar Ltd., which earnings report is due Nov. 19, sank 4.4 percent to $16.17, snapping a two-day gain.
ADRs of Huaneng Power International Inc. (902), China’s biggest electricity producer, slumped 2.9 percent to a two-month low of $39.37.
Vipshop, based in Guangzhou, jumped 15 percent to $84.48 in New York, the highest close since its U.S. listing in March 2012. The company forecast fourth-quarter revenue of as much as $590 million, beating analysts’ average projection compiled by Bloomberg. Third-quarter adjusted profit also exceeded estimates.
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