Jan. 9 (Bloomberg) -- Qihoo 360 Technology Co. jumped to a two-month high, driving gains among Chinese shares traded in New York, amid speculation Alibaba Group Holding Ltd. may invest in the Internet company.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York rose 0.8 percent to 103.93. Qihoo surged 9.3 percent after Beijing-based market research firm Marbridge Consulting Ltd. reported that Alibaba, China’s biggest e-commerce company, is negotiating the terms of an investment. Perfect World Ltd., an online game developer, jumped 12 percent after China lifted a 13-year ban on gaming consoles. Yanzhou Coal Mining Co. slumped to a five-month low.
Alibaba paid $586 million in April for about 18 percent of Sina Corp.’s Twitter-like Weibo service to attract growing smartphone and tablet users. Shares of Sina have jumped 62 percent after Alibaba acquired the stake. An Alibaba investment in Qihoo, China’s second largest search engine after Baidu Inc., may be similar to the deal with Weibo, Marbridge reported.
“The potential traffic from Alibaba will support Qihoo’s share prices,” Echo He, an analyst at Maxim Group LLC in New York, said by phone. “Baidu is dominating the search business. Without Alibaba, Qihoo will find it difficult to compete.”
Given historical “conflicts” between the two companies, the likelihood of an Alibaba investment in Qihoo is “low,” Hong Kong-based 86Research Ltd. said in a note yesterday. An e-mailed message to Alibaba’s spokesman John Spelich, seeking comment on the Marbridge report after normal business hours, wasn’t immediately returned.
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., added 1.2 percent to $36.45 in New York, the biggest gain this year. The Standard & Poor’s 500 Index was little changed after minutes from the Federal Reserve showed officials expressed concern about risks to financial stability.
Qihoo jumped to $89, the highest since Nov. 13. Marbridge said negotiations between Qihoo and Hangzhou, China-based Alibaba have been under way “for a significant period of time,” citing Lieyunwang.com, a Chinese blog focusing on the information technology and Internet industries.
China’s three largest Internet companies, Alibaba, Shenzhen-based Tencent Holdings Ltd. and Beijing-based Baidu, announced $3.5 billion of acquisitions last year to cash in on the 591 million Internet users in the country. Alibaba, which may be headed toward the biggest initial public offering since Facebook Inc., teamed up with Qihoo in May to start e-commerce search engine 360.etao.com to compete with Baidu.
Kathy Price, a vice president at Piacente Group Inc., an investment relations agency for Qihoo, said the company’s management couldn’t be immediately reached for comments after normal business hours in China.
Perfect World led a rally in gaming companies, climbing to a three-month high of $20.67. Trading volume was four times the daily average of the past three months. Beijing-based Changyou.com Ltd. increased 3.9 percent to $33.70, the highest since October, while NetEase Inc. rose 3.4 percent to a record $82.40.
China suspended a ban on gaming consoles on Jan. 7 while it drafts new rules. Consoles such as Microsoft’s Xbox 360, Nintendo Co.’s Wii U and Sony’s PS were banned under a 2000 rule to protect young people from the perceived corrupting influence of video games.
“Of the developers, it seems like Perfect World is the one that has the most ambitions around console gaming,” said Cheng Cheng, an equity analyst with Pacific Crest Securities LLC, said by phone from Portland, Oregon. “So with the unfreezing of console gaming in China, Perfect World may be one of the companies in a better position to benefit from that or be active in that market potentially.”
Alibaba is building a platform to promote and distribute third-party mobile games, Liu Chunyu, president of a newly formed unit focusing on the digital entertainment business, said in an e-mailed statement sent by the company yesterday. Game developers will get 70 percent of the revenue and Alibaba 20 percent, with 10 percent going to charity, according to Alizila, a website run by Alibaba.
Cnooc Ltd., China’s largest offshore oil firm, rose 2 percent to $180.90, the biggest gain since November. UBS AG’s analyst Peter Gastreich raised his rating the company to buy from neutral.
Yanzhou Coal, China’s fourth-largest coal producer, tumbled 2.3 percent to $8.08, the lowest since Aug. 9. General manager Zhang Yingmin has resigned because he was reaching the retirement age, the company said in a statement.
The Shanghai Composite Index fell for the fourth time in five trading days this year, losing 0.2 percent to 2,044.34 on concern the resumption of initial public offerings will divert funds. The Hang Seng China Enterprises Index in Hong Kong climbed 0.9 percent to 10,329.82, snapping a four-day slide.
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