Chinese stocks traded in the U.S. fell for a second day, led by solar companies, as concern over the outlooks for the U.S. and Europe outweighs a slower inflation pace in the Asian nation.
The Bloomberg China-US 55 Index slumped 0.2 percent to 100.32 as trading closed in New York. LDK Solar Co. dropped the most among peers on speculation a rally the day before was excessive. China Eastern Airlines Corp. traded at the biggest premium in three weeks of 1.8 percent over its Hong Kong-listed shares. Video website Tudou Holdings Ltd. led gains in Internet companies while Sina Corp. rose after a recommendation upgrade.
Inflation for December cooled to the slowest pace in 15 months in China. Policy makers cut reserve ratios for banks last month for the first time since 2008 to spur lending as the economy grew the least in two years. U.S. data showed jobless claims increased more than forecast last week and December retail sales rose less than projected.
“The odds dwindled a little bit” for China to cut banks’ reserve ratio before the Chinese New Year starting Jan. 23, David Woo, the global head of rates and currencies in New York at Bank of America Merrill Lynch said in an interview with Bloomberg Television. “Before we get too bullish on China, we need to be a little bit more cautious about the outlook for the U.S. and Europe.”
Consumer prices rose 4.1 percent in December from a year earlier, China’s statistics bureau said yesterday. That compared with the 4 percent median estimate of 26 economists in a Bloomberg survey and a 4.2 percent gain in November.
Shanghai Stock Benchmark
The Shanghai Composite Index slipped 0.1 percent to 2,275.01. The Standard & Poor’s 500 Index of U.S. stocks advanced for the fourth day, adding 0.2 percent to 1,295.50.
“The market shouldn’t expect China will loosen policy very soon,” Joseph Yam, former Chief Executive at the Hong Kong Monetary Authority, told reporters yesterday in the city. “China’s prudent monetary policy stance is appropriate. If they loosen that very soon, I would indeed worry about a significant slowdown in the economy.”
LDK, based in Jiangxi province in China, sank 4.3 percent to $5.28, following an 18 percent gain a day earlier. Suntech Power Holdings Co., the biggest solar-panel maker, retreated 3.1 percent after surging 27 percent in the previous session.
The Jan. 11 rally in Chinese solar shares followed reports that the government plans to develop 3 gigawatts of solar capacity this year while Germany installed 3 gigawatts of solar panels in December, the most in a single month.
“The market is too bullish on German and Chinese demand,” Hong Kong-based analysts led by Scully Tsoi at Samsung Securities Co. wrote in a report yesterday. “We remain cautious on the sector owing to overcapacity issues.”
Sanjay Shrestha, an equity analyst at Lazard Capital Markets, cut Suntech yesterday to “neutral” from “buy” while maintaining a “buy” rating on Trina Solar Ltd.
Trina rose 9.4 percent, taking its gains this week to 52 percent.
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose 0.3 percent to $36.84. The yuan was little changed at 6.3178 a dollar, according to the China Foreign Exchange Trade System.
The American depositary receipts of China Eastern, a Shanghai-based carrier, climbed 2.5 percent to $18.75, 1.8 percent higher than its share price in Hong Kong, the biggest premium since Dec. 22. Each ADR represents 50 common shares.
China Eastern plans to boost capacity 10 percent this year and expects domestic market demand to expand as much as 12 percent, Richard Wei, an analyst at UBS AG, said in a note to investors yesterday. The company plans no new long-haul routes and will cut some unprofitable services this year, according to the note.
The ADRs of China Southern Airlines Co., Asia’s biggest carrier, advanced 1.5 percent to $29.72 and traded at a 1.7 percent premium over its Hong Kong-listed shares.
Tudou, the operator of China’s second-largest online-video website, leaped 9.2 percent to one-month high of $12.23.
“Tudou became the top video website in terms of both unique users and market share based on page views,” Connie Gu, a Beijing-based analyst at Bocom International Holdings Co. said in a monthly report on Internet traffic yesterday.
Sina, the Twitter-like service provider in China, gained 4.6 percent to a one-month high of $60.12. The company was raised to “overweight” from “neutral” at JPMorgan Securities Ltd. by equity analyst Dick Wei, with a 12-month price target of $79.
China, the world’s second-largest economy, expanded 9.1 percent in the third quarter from a year earlier, down from 9.5 percent growth in the second quarter. The growth probably slowed to 8.7 percent in the last three months, according to the median forecast of 27 economists in a Bloomberg survey. The government is scheduled to report the figures Jan. 17.