Chinese travel companies led declines in the nation’s stocks traded in New York after a report showed tourist arrivals retreated for a fifth month as the economy slows.
Elong Inc., China’s second-biggest online travel agency, dropped the most in two weeks, and the largest, Ctrip.com International Ltd., sank to a one-week low. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. fell 0.3 percent to 91.59 yesterday, after retreating 2.2 percent last week. Social media company Renren Inc. tumbled as Barron’s said Facebook Inc. is overvalued.
Visitor arrivals to China in August dropped 2.4 percent compared with a year ago, the National Tourism Association said yesterday. A “material recovery” in the economy, which has decelerated for six straight quarters, won’t come before the first half of 2013, Barclays Plc said yesterday in a report. MSCI indexes show Chinese equities are lagging behind Russian, Brazilian and Indian shares this quarter.
“Stocks are going to look for some evidence that economic growth really has bottomed,” Timothy Ghriskey, chief investment officer at Solaris Group LLC, which manages about $2 billion in assets, said yesterday by phone from Purchase, New York. “We are expecting a growth re-acceleration from early next year. Before that, the stock market’s slump will continue.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., declined 0.3 percent to $34.65 yesterday. The Standard & Poor’s 500 Index slid 0.2 percent to 1,456.89 as European leaders clashed on ways to stem the debt crisis and economic data from China and Germany signaled that the slowdown is deepening.
China’s manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, a survey summary by the New York-based researcher CBB International LLC showed yesterday. Twenty-three economists surveyed by Bloomberg News this month forecast growth would slow to 7.4 percent in the third quarter from 7.6 percent in the previous three months, based on the median estimate.
Companies and traders visited by Barclays didn’t show any impact from the stimulus “on the ground,” Barclays economists led by Jian Chang wrote in a note yesterday. Chinese equities have risen 3.1 percent this quarter, compared with gains of 12 percent in Russian stocks, 8.4 percent for Brazilian shares and 7.8 percent for those of India, according to the MSCI measures.
Elong, which receives more than 75 percent of its revenue from hotel reservations, retreated 2.2 percent to $17.71, the biggest slump since Sept. 10. Ctrip.com lost 1.5 percent to $17.4, the lowest level since Sept. 13.
Foreign visitors arrivals in China have shown year-on-year declines since April, data from the Chinese tourism organization showed. Income from foreign tourists fell 1.8 percent to $4.2 billion last month. Chinese consumers are boycotting Japanese goods and travel to the country after it moved earlier this month to nationalize disputed islands in the East China Sea.
“Tourism between China and Japan has basically shut down,” Michael Ding, lead portfolio manager of the China Regional Fund at U.S. Global Investors, which oversees about $2 billion, said in a phone interview from San Antonio. “Tourism was already slowing and now you have this. Travel stocks are going to suffer.”
Renren, which runs a real-name social networking website in China, plunged 4.8 percent to $3.95, the steepest slump in three weeks.
Facebook tumbled as much as 11 percent yesterday in New York after Barron’s said the world’s largest social networking service is overvalued as it falls behind in capitalizing on the growing number of mobile-device users.
Focus Media, a digital advertising company based in Shanghai, sank 3.6 percent to $22.91, the lowest since Aug. 1. The company’s board said on Aug. 13 it received a “going-private” proposal from its chief executive officer and a group of private-equity firms, who bid for taking the company private at $27 per share.
“Investors appear to be saying that they’re not going to wait around for this deal to close,” David Riedel, president of Riedel Research Group Inc., said by phone from San Francisco yesterday.
Suntech Power Holdings Co., the world’s largest solar-panel maker, tumbled 6.5 percent to $1.01, snapping a six-day rally. Trina Solar Ltd., the fourth-largest, slid 2.2 percent to $4.4.
Chinese solar companies have started cutting jobs as they seek to reduce overcapacity in the industry, the Beijing Morning Post reported yesterday, citing plans at Suntech, Trina and LDK Solar Ltd.
Suntech said Sept. 21 that it received a warning notice from the New York Stock Exchange after its share prices failed to meet criteria for continued listing.