Chinese stocks traded in New York rose the most in two weeks on prospects policy makers will take more steps to revive economic growth after a unit of its sovereign wealth fund vowed to support banking shares.
The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. surged 1.5 percent to 93.62 yesterday. Cnooc Ltd. gained the most since Sept. 27 as PetroChina Co. rose to a three-month high. New Oriental Education & Technology Group Inc. jumped to the highest level since July on speculation the educational company will file its fiscal year-end results next week. Yanzhou Coal Mining Co. advanced to a two-month high after Citigroup Inc. highlighted a buy recommendation among global peers.
Central Huijin Investment Ltd., a unit of China’s sovereign wealth fund, started acquiring shares in the nation’s four largest banks including Industrial & Commercial Bank of China Ltd. China’s yuan rose beyond 6.28 per dollar for the first time in 19 years yesterday on bets the government will add stimulus to spur an economy that grew at the slowest pace in three years.
“The sovereign fund’s increasing holdings in banks can be a minor step, but it does provide some degree of comfort to the market,” Michael Gayed, the chief investment strategist at Pension Partners LLC, which advises on over $150 million in assets, said by phone from New York yesterday. “The more the yuan is strengthening, the more likely the market anticipates more stimulus is going to come to counter that strength as the government wants a weaker yuan to help with its exports.”
China ETF Surges
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rallied for a third day, gaining 2.4 percent to a five-month high of $36.09. The Standard & Poor’s 500 Index was little changed at 1,432.84.
China’s Communist Party will hold a congress starting Nov. 8 for the once-a-decade power transition. The country’s economy probably expanded 7.4 percent in the three months ended Sept. 30, according to the median estimate of 36 analysts surveyed by Bloomberg before a government report due Oct. 18. That would be the slowest pace since the first quarter of 2009.
Investors are still anticipating more policy response from China to support growth and a stronger yuan is bolstering investors’ optimism, according to Edmund Harriss, who helps manage a $150 million equity fund at Guinness Atkinson Asset Management in London.
“Optimism for that is growing,” he said. “The policy they are looking to enact is likely to focus on infrastructure. We won’t see many concrete announcements until after the party’s congress.”
New Oriental, a Beijing-based private education service provider being investigated by U.S. regulators, surged 6 percent to $17.95, the highest since July 16 in New York.
Investors expect New Oriental to meet an Oct. 15 deadline to make a 20-F fiscal year-end filing with the SEC, said Trace Urdan, a San Francisco-based analyst at Wells Fargo & Co. who rates the stock outperform. Short seller Muddy Waters LLC has alleged that the Chinese education provider is misleading investors. New Oriental said on Sept. 30 that a probe by three independent company directors found no evidence to support fraud allegations.
“Any information from the company is more of a positive catalyst,” Urdan said in a phone interview yesterday. “By not filing, New Oriental would risk being delisted, so investors appear to be expecting relatively good news soon.”
Cnooc, China’s largest offshore oil explorer, climbed 2.8 percent to $204.61. Its American depositary receipts, each representing 100 underlying shares, traded 0.6 percent above the Hong Kong-traded stock, the widest premium in a week.
Canada said it extended its review of Cnooc’s $15.1 billion takeover of Calgary-based Nexen Inc. for 30 days to conduct a “thorough and careful” assessment. “Extensions to the review period are not unusual,” Industry Minister Christian Paradis said in an e-mailed statement yesterday.
PetroChina, the country’s biggest oil producer, added 2 percent in the third day of gains to $133.75, the highest level since June 20.
Crude oil for November delivery rose 0.9 percent to $92.07 a barrel on the New York Mercantile Exchange. Prices are up 7.3 percent from this time last year.
ADRs of Yanzhou Coal, China’s fourth-largest coal miner, advanced 2.9 percent to a two-month high of $16 in New York. The ADRs traded at a 1.7 percent premium over its Hong Kong stock, the most in a week. Citigroup named Yanzhou as one of the “key buys” among mining companies in the world in a report yesterday.
Chalco ‘Key Sell’
Aluminum Corp. of China, the country’s largest maker of the lightweight metal, was listed as one of the “key sells.” Chalco’s ADRs dipped 0.3 percent to $10.34 in their fourth day of declines.
Melco Crown Entertainment Ltd. rose for a third day after JPMorgan Chase & Co. boosted its profit estimate for a competitor. Melco, which operates casinos in Macau, added 1.1 percent to $13.39.
JPMorgan analyst Joseph Greff raised his forecast for the third-quarter profit of Las Vegas Sands Corp. on better-than-estimated customer visits in a note yesterday. Analysts’ projections for Macau casino operators, including Melco, may increase in the next few weeks, according to the report.
The Shanghai Composite Index sank 0.8 percent to 2,102.87 yesterday after a two-day advance. The Hang Seng China Enterprises Index of Chinese companies in Hong Kong surged 1.9 percent to 10,231.2, the strongest level in five months.