Focus Media Tops Consumer Rally on Rebound Bets: China Overnight
Chinese consumer stocks traded in New York rose, sending the benchmark index (SHCOMP) to the highest level in a month, after the Commerce Minister said Asia’s fastest growing economy is poised for a rebound this month.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in New York jumped 1.8 percent to 94.09, the highest level since May 16. Focus Media Holding Ltd. (FMCN), a digital advertising company, rallied 6.2 percent and Luxury-goods company Michael Kors Holdings Ltd. (KORS) surged to a three-week high. Aluminum Corp. of China Ltd., known as Chalco, traded at the highest premium in eight days to its Hong Kong shares after its engineering unit announced a share offering plan.
Chinese Commerce Minister Chen Deming told reporters June 18 in Los Cabos, Mexico, that his country’s economic situation in June is improving following government measures to shore up consumption. China’s central bank cut interest rates on June 7 for the first time since 2008 and has lowered required-reserve requirement ratio for banks three times since November to spur lending. The finance ministry extended subsidies to buyers of energy-saving home appliances this month.
“I certainly wouldn’t suggest investors sell Chinese stocks, and I’m quite happy to build positions gently,” Edmund Harriss, who helps manage a $150 million equity fund at Guinness Atkinson Asset Management, said by phone yesterday from London. “If a policy official says June will look better, it will probably turn out that way. I’m reasonably optimistic.”
The iShares FTSE China 25 Index Fund (FXI), the biggest U.S.- listed China exchange-traded fund, surged 1 percent to a five- week high of $34.90. The Shanghai Composite Index of mainland stocks dropped 0.7 percent to 2,300.80, in its first slump in three days. The Standard & Poor’s 500 Index climbed 1 percent to 1,357.98, the highest level since May 10, as investors speculated the Federal Reserve will announce more measures to stimulate the U.S. economy.
Shanghai-based Focus Media jumped 6.2 percent to $21.30 in its fourth day of gains. Short sale interest in the company has declined to 7.7 percent of the company’s outstanding shares by June 15, from 9.8 percent a week earlier and 43 percent at the beginning of the year, according to Data Explorers, a New York- based research firm.
Hong Kong-based Michael Kors gained 4.3 percent to $41.11, the highest level since May 29, as it extended a three-day rally, the longest winning streak in almost a month.
“We like China because of the growth,’ Mobius said. ‘‘A lot of people ask me if China is having a hard or soft landing. And we tell them China’s not having a landing and it continues to fly.”
China Aluminum International Engineering Corp., a unit of the nation’s largest maker of the lightweight metal, plans to issue 363.2 million shares at HK$3.93 to HK$4.73 each and list the shares on July 6, according to the company’s prospectus. Six so-called cornerstone investors, including Yunnan Aluminum Co. Ltd., agreed to buy about $100 million of the offering, the prospectus said.
Chalco’s American depositary receipts added 2.8 percent to a six-week high of $10.94 in New York. The ADRs, each representing 25 underlying shares in the company, traded 2.3 percent above its Hong Kong stock, the widest premium since June 7.
Sina Corp., which runs a Twitter-like Weibo service in China, advanced 3.8 percent to $57.05, the strongest level since May 16.
The Shanghai-based company also agreed to partner with HTC Corp. (2498), Asia’s second-largest smartphone maker, on services and applications for mobile Internet, HTC said in an e-mailed statement to Bloomberg News.
iSoftStone Holdings Ltd., a Beijing-based information technology service provider, jumped 9.2 percent to $6.08.
Dick Wei, a Hong Kong-based analyst at JPMorgan Chase & Co., reiterated yesterday his overweight recommendation on the company, maintaining a price target of $18.
LDK Solar Co., the world’s second-largest maker of wafers based in Xinyu of China’s Jiangxi province, sank 6.3 percent to $2.07, leading declines on the Bloomberg China index. Phoenix New Media Ltd. (FENG), the Beijing-based Internet, TV and mobile-news provider, retreated for the first time in seven days, dropping 6.3 percent to $5.22 yesterday in New York.
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