Chinese equities traded in the U.S. rose the most in three months after the nation cut banks’ reserve requirements for the first time since 2008 to bolster growth.
The Bloomberg China-US 55 Index jumped 4.7 percent to
101.05 at the close of trading in New York yesterday, its biggest gain since Aug. 11. The surge pushed the benchmark up
1.3 percent for the month. Melco Crown Entertainment Ltd., the Macau casino operator, soared 13 percent after saying its shares will be listed in Hong Kong this month. Changyou.com Inc. and Youku Inc. led gains for Internet companies. Most solar shares rebounded after ratings upgrades.
Chinese banks’ reserve ratios will decline by half a percentage point effective Dec. 5, the People’s Bank of China said yesterday after local markets closed. Two hours later, the U.S. Federal Reserve, the European Central Bank and the monetary authorities of the U.K., Canada, Japan and Switzerland said they were cutting the cost of emergency dollar funding to ease strains in financial markets.
“The impact of the reserve ratio cut is definitely going to be positive, at least for the next few days,” said John Wong, a Hong Kong-based portfolio manager at Oberweis Asset Management Inc. “The timing could not have been better because the Chinese would like to improve liquidity before the Chinese New Year holiday in January.”
The 34 member nations of the Organization for Economic Cooperation and Development will grow 1.9 percent this year and
1.6 percent in 2012, down from the 2.3 percent and 2.8 percent predicted in May, the OECD said in a report on Nov. 29.
Growth in China’s economy, the world’s second largest, will slow to 8.5 percent next year, the Paris-based OECD said, down from its May forecast of 9.2 percent. The economy expanded 9.1 percent in the third quarter from a year earlier, the least in two years. UBS AG this week lowered its prediction for growth in 2012 to 8 percent from its previous call of 8.3 percent, and Citigroup Inc. cut its forecast to 8.4 percent from 8.7 percent.
The Standard & Poor’s 500 Index rose 4.3 percent to 1,246.96, the most since August, after the central banks’ announcement. The Shanghai Composite Index sank 3.3 percent, the most in almost four months, before the Chinese government announced the reserve ratio cut.
A Chinese report due today may show November manufacturing is likely to contract for the first time since February 2009. The Purchasing Managers’ Index may fall to 49.8 from 50.4 in October, according to the median forecast of 18 economists surveyed by Bloomberg. A reading below 50 indicates contraction.
Melco Crown leaped the most since Oct. 6 to $9.92. It said after U.S. trading closed Nov. 29 its listing on the Hong Kong Stock Exchange won’t include the sale of new shares.
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., surged 5.6 percent, the most in a month, to $36.22. The Chinese yuan was little changed at
6.3789 a dollar, according to the China Foreign Exchange Trade System. The currency weakened 0.4 percent in November, the biggest monthly loss since August 2010, after China’s October exports grew at the slowest pace since 2009.
Youku, China’s biggest online-video website, leaped 11 percent yesterday to a two-week high of $19.53, trimming its loss in the month to 8 percent. Its rival Tudou Holdings Ltd., which completed a $174 million U.S. initial public offering in August, gained 1.7 percent to $12.02, reducing its November loss to 27 percent.
China will ban television stations from airing commercials during broadcasts of dramas starting Jan. 1, the nation’s regulator of radio, film and television said on Nov. 28.
“The new restriction may lead to a shifting in advertising budgets to other media formats, including online video services,” Paul Wuh, a Hong Kong-based analyst at Samsung Securities Co., wrote in a research note yesterday.
Trina Solar Ltd., the fifth-largest solar-panel maker in China, surged 16 percent to $8, leading gains among peers.
Auriga USA LLC’s analyst Hari Chandra Polavarapu increased his recommendation on Trina to “buy” from “sell” and raised the price target to $9 from $3.5. Suntech Power Holdings Co., the world’s largest maker of solar panels, advanced 10 percent to $2.48 after Auriga raised it to “hold” from “sell,” lifting the price goal to $3 from $1. Yingli Green Energy Holding Co. was also upgraded to “buy” from “sell” at Auriga. Its shares jumped 12 percent to $4.32, the highest in a month.
Changyou.com, the online games unit of China’s fifth-most visited website Sohu.com Inc. surged 15 percent after saying it will buy from Sohu the business of 17173.com, a game information website, for $162.5 million in cash. The deal will close in December, Changyou said in a statement Nov. 29.
After the announcement, analyst Ming Zhao at Susquehanna International Group LLP added $39 million to his estimate for Changyou’s 2012 sales, and 30 cents to his earnings forecast to $5.02 per American depositary receipt.
Sohu.com Inc., which also owns an online video operation, increased 2.9 percent to $49.44, reducing its November decline to 18 percent.
Baidu Inc, the owner of China’s most popular online search engine, advanced 4.9 percent to $130.99. The company’s ADRs have gained 36 percent this year, the most among major Chinese Internet stocks traded in the U.S.
Sina Corp., owner of the Twitter-like Weibo service in China and holder of a 9 percent stake in Tudou, increased 5.4 percent, the most in a month, to $66.08.
The Shanghai benchmark stock measure is trading at 11.1 times estimated earnings, compared with 13.9 for Indian stocks,
10.3 for Brazilian shares and 5.2 for Russian equities.