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Baidu Rebounds as U.S. Data Boost ADRs: China Overnight

Internet stocks led gains in Chinese equities trading in New York, rebounding after last week’s technology-sector selloff in U.S. markets.

The Bloomberg index of the most-traded Chinese companies in the U.S. rose 0.3 percent to 100.16 yesterday. Baidu Inc., owner of China’s most popular search engine, climbed 2.7 percent and Youku Tudou Inc., a video website, also advanced. NQ Mobile Inc., a mobile-services provider that has been the target of short-seller Carson Block since October, plunged 13 percent, extending its three-day loss to 34 percent.

The Nasdaq Composite Index, which has 97 China-based member companies including Baidu, rose yesterday after three straight weeks of declines for the longest losing streak since 2012. Retail sales in the U.S. surpassed economists estimates, Commerce Department figures showed yesterday, raising the prospect of stronger American consumer demand and boosting Chinese companies after exports fell in March, according to RidgeWorth Capital Management.

“We’re getting a combination of an oversold bounce combined with the better-than-expected demand data for retail sales,” Alan Gayle, who helps oversee about $50 billion in assets at the Richmond, Virginia-based firm, said in a phone interview. “For the exporters this can only be good news.”

Chinese imports and exports unexpectedly fell last month, with overseas shipments declining 6.6 percent from a year earlier, the customs administration said April 10. It attributed the drop partly to distortions from inflated data in early 2013.

NQ Plunges

Retail sales in the U.S. climbed 1.1 percent, surpassing the 0.9 percent median of 78 economist estimates compiled by Bloomberg. A previously reported 0.3 percent increase in February sales was revised upward to 0.7 percent.

Baidu, based in Beijing, rose to $153.76, erasing a two-day, 5 percent retreat. Youku advanced 1 percent to $25.02, its first increase in three days.

NQ Mobile sank to a four-month low of $11.05, declining the most on the Bloomberg gauge, after reporting weaker-than-forecast fourth-quarter earnings on April 10. Block’s Muddy Waters LLC, which first targeted NQ Mobile in an October report, said in a note on its website that the company’s disappointing results indicate it faced a “more robust” audit in the quarter than in previous years.

Block wrote in an Oct. 24 report that investors should sell NQ Mobile because it misrepresented its cash balances and exaggerated sales. NQ’s American depositary receipts have tumbled 52 percent since.

ETF Gains

PricewaterhouseCoopers Zhong Tian is NQ Mobile’s auditor, according to the Beijing-based company’s annual report. Chen Yan, a press official at PwC, said the firm doesn’t comment on its clients. Kim Titus, a spokesman for NQ Mobile, declined to comment on the trading and Block’s allegations.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., added 0.2 percent to $36.20. The Standard & Poor’s 500 Index increased 0.8 percent and the Nasdaq gauge gained 0.6 percent.

The Shanghai Composite Index (SHCOMP) advanced 0.1 percent to 2,131.54 yesterday and the Hang Seng China Enterprises Index of mainland companies in Hong Kong rose 0.2 percent to 10,244.02.

To contact the reporter on this story: Alexandria Baca in New York at abaca3@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Marie-France Han, Rita Nazareth

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