Baidu Tumble Sends U.S. Index to Two-Month Low: China Overnight

Chinese stocks trading in the U.S. fell to a two-month low, led by declines for Baidu Inc. and Cnooc Ltd., on mounting concern that the slowdown in the world’s second-biggest economy may worsen.

The Bloomberg China-US 55 Index of the most-traded Chinese stocks lost 1.3 percent to 93.46, the lowest closing level since Oct. 7. Baidu, owner of the country’s biggest search engine, dropped 3.1 percent. The American depositary receipts of Cnooc, China’s largest offshore oil explorer, fell 1.6 percent to $175.82. The ADRs, which are worth 100 ordinary shares, are at a $1.78 discount to the equivalent shares in Hong Kong.

Reports this week showed foreign direct investment in China fell in November from a year earlier for the first time since 2009, the money supply grew the least in a decade and the manufacturing sector contracted in December. Chinese Commerce Minister Chen Deming told reporters in Geneva that he is “not too optimistic” about exports next year.

“Investors are still very much focused on the slowdown at the moment,” said Mark Konyn, the Hong Kong-based chief executive officer of RCM Asia Pacific Ltd., said in a Bloomberg Television interview “Our view is this slowdown will bottom out at the end of the first quarter. Overall a lot of the bad news is already discounted.”

The Shanghai Composite Index of domestic shares lost 2.1 percent to 2,180.90, the lowest close since March 2009. The Hang Seng China Enterprises Index, which tracks Chinese companies trading in Hong Kong, declined 2.1 percent to a two-week low.

Baidu’s Slump

Baidu has lost 9.7 percent in the past five trading days to $114.34. Credit Suisse AG cut its earnings estimates for the company on Dec. 13, citing lower prices Baidu charged advertisers on search results. Susquehanna International Group LLP said in a report yesterday that Baidu is on track to deliver its earnings forecast. The research firm drew the conclusion after a discussion with management, according to the report.

Renren Inc., a Beijing-based social networking website, lost 3.6 percent to $3.47. E-Commerce China Dangdang Inc., the nation’s largest online book retailer, dropped 3.6 percent to $4.25. Brean Murray & Co Research initiated coverage of the two companies with “hold” ratings for both.

AsiaInfo-Linkage Inc., a software provider, declined 6.9 percent to $7.39. The company appointed Yadong Jin, a general manager of marketing, as the chief technology officer. Before joining AsiaInfo in 2008, Jin served as the consultation director of the Hewlett-Packard Development Co. for three years.

Yanzhou Coal Mining Co., China’s fourth-largest producer of the fuel, lost 2.9 percent to $20.16.

Shanghai Index

China’s domestic bourse has lost 22 percent this year, following a 14 percent decline in 2010, as policy makers raised borrowing costs to combat inflation and took measures to curb housing prices. The Shanghai Composite Index is trading at 10.4 times forecast earnings in the next 12 months, compared with 13.7 in India, 4.8 in Russia and 10 in Brazil.

The central bank reduced the reserve requirement ratio for lenders on Nov. 30 for the first time since 2008 to temper the pace of the economic slowdown.

Policy makers will lower the ratio once more this year and five times in 2012 as inflation slows, according to Standard Chartered Plc. China’s consumer-price gains will average 2 percent next year, economists Li Wei and Stephen Green wrote in a note to clients. Annual inflation slowed to 4.2 percent in November, from a three-year high of 6.5 percent in July.

The IShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., lost 0.8 percent to $34.09.

The Chinese yuan fell 0.1 percent to 6.3735 per dollar in Shanghai, according to the China Foreign Exchange Trade System.