Chinese stocks rose in the U.S. for the first time in three days as stimulus measures by Japan’s central bank and U.S. housing data boosted the outlook for exporters. Ctrip.com International Ltd. rallied.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in New York added 1.4 percent to 92.79 yesterday. Internet-based retailer E-Commerce China Dangdang Inc. surged while Ctrip jumped to a three-month high as China’s largest online travel agency sold $160 million of convertible notes. Social media operator Renren Inc. climbed the most in six weeks and NetEase Inc. gained after Nomura Holdings Inc. raised its recommendation to neutral from reduce.
The central bank of Japan, China’s fourth-largest export destination, unexpectedly expanded its asset-purchase fund by 10 trillion yen ($126 billion) to counter a slowdown in the world’s third-largest economy. The move follows similar actions by the European Central Bank in August and the U.S. Federal Reserve earlier this month. Sales of existing U.S. homes rose more than forecast in August, a sign the country’s housing market is gaining strength in the second half of the year.
“Japan in concert with the world’s central banks acting to stimulate demand is certainly a positive for Chinese stocks,” Gabriel Wallach, who manages $2.5 billion in global emerging market assets as chief investment officer at BNP Paribas Investment Partners, said by phone from Boston yesterday. “Any recovery in existing U.S. home sales is a positive sign for the U.S. economy and a positive for Chinese exports.”
China ETF Advances
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., increased 1.6 percent to $35.08, snapping a two-day decline. The Standard & Poor’s 500 Index added 0.1 percent to 1,461.05.
Japan, which counts China as its biggest buyer of goods and services, took steps to avoid a further economic slowdown. Central banks across the globe have had to come up with new tools to stabilize currencies and spur growth. The U.S. Federal Reserve last week unveiled a third round of so-called quantitative easing, committing to indefinitely purchase $40 billion of mortgage debt a month.
China is likely to further cut its banks’ reserve ratio as its seeks measures to bolster growth, Ding Shuang, a Hong Kong-based senior economist at Citigroup Inc. said in a Sept. 18 interview on Bloomberg Television. China’s third-quarter growth may slow to 7.4 percent from 7.6 percent in Q2, a survey of 23 economists surveyed by Bloomberg shows.
China reduced benchmark interest rates in June and July, and has lowered required reserve-ratio for banks by 1 percentage point this year to spur lending.
Shanghai-based Ctrip climbed 5.6 percent to $18.57, the highest since June 8, as volume totaled more than four times the stock’s three-month daily average, according to data compiled by Bloomberg. Ctrip said the five-year notes due September 2017 were priced with a 0.5 percent interest rate and can be converted into the company’s ADRs at $19.34, or about a 10 percent premium over the closing price yesterday.
“The offering was well received by investors, and the company got favorable terms on the sale,” Andy Yeung, an New York-based analyst at Oppenheimer & Co., said yesterday.
Ctrip’s senior management team bought a total $55 million of the bonds in the sale, and the company will use a portion of the net proceeds to buy back company shares in private transactions, it said.
E-Commerce, the biggest online book retailer in China known as Dangdang, surged 6.9 percent to $5.45, the most since Aug. 6.
NetEase, the Beijing-based online games company, advanced the most in four weeks, rising 3.4 percent to $51.93, as Nomura analyst Jin Yoon raised its rating and boosted its 12-month target price to $48 from $45.
Renren climbed 5 percent to a six-week high of $4.20 as Porter Bibb, managing partner at the merchant bank Mediatech Capital Partners in New York, mentioned the Beijing-based social networking website in an interview on CNBC. Volume was 4.5 times the daily three-month average.
Purchases of existing U.S. houses increased 7.8 percent in August to a 4.82 million annual rate, the most since May 2010, figures from the Washington-based National Association of Realtors showed yesterday. The median forecast of 78 economists surveyed by Bloomberg called for sales to increase to a 4.56 million pace.
Record-low mortgage rates, more affordable properties and limited supply of new homes are driving new orders while sales of distressed properties are starting to account for a smaller share of the market.
“It does seem like the U.S. housing market is starting to recover and that is certainly constructive for the U.S. economy and ultimately for emerging markets,” Lewis Kaufman, a Santa Fe, New Mexico-based money manager at Thornburg Investment Management who oversees the Thornburg Developing World Fund and helps manage $79 billion, said yesterday.
The Shanghai Composite Index advanced 0.4 percent yesterday to 2,067.83. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong climbed 1.7 percent to a one-month high of 9,849.06.