Tudou Drops as Growth Concerns Trigger Tumble: China Overnight
Chinese equities fell in New York, sending the benchmark index to to the lowest level in nine months, on concern stimulus measures will take time to spur growth in the world’s second-largest economy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York lost 1.4 percent to 86.55 yesterday, the lowest level since Oct 5. Tudou Holdings Ltd. (TUDO) led declines in Internet companies after the South China Morning Post said the resignation of the video website’s chief operating officer may prompt more people to leave. Aluminum Corp. of China Ltd. slid the most among government-owned companies after their combined first-half net income fell 12 percent.
The International Monetary Fund cut its 2013 global growth forecast yesterday, reducing projections for China’s growth this year to 8 percent from 8.2 percent three months ago. China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, according to a Xinhua News Agency report July 15, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week.
“People are pessimistic about Chinese stocks because they haven’t seen obvious and quick effects of the stimulus measures,” Elena Ogram, who manages $50 million in emerging market assets, including Chinese stocks, at Bank am Bellevue AG said by phone yesterday from Zurich. “People will remain skeptical until there’s some confirmation that the stimulus which is being gradually introduced this year would feed through into the economy.”
China ETF Slides
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., fell 0.4 percent to $32.46 after losing 2.6 percent last week. The Standard & Poor’s 500 Index (SPX) dipped 0.2 percent to 1,353.64 as the IMF lowered its estimates for global growth to 3.9 percent next year, from a 4.1 percent prediction in April.
Foreign direct investment in China dropped 3 percent in the first six months from a year earlier to $59.1 billion, Xinhua News Agency reported yesterday, citing Vice Commerce Minister Wang Chao.
Shanghai-based Tudou, which agreed to be acquired by the larger competitor Youku Inc. (YOKU) in a stock swap deal announced in March, sank 5.4 percent to $27.44. Youku, operator of China’s most popular video website, dropped 4.8 percent to a six-month low of $18.01.
The resignation of Tudou’s chief operating officer may prompt more people to leave Tudou, the South China Morning Post reported yesterday, citing Hong Bo, a Beijing-based IT commentator and Alex Mou, the chief executive of Internet software and analysis firm Zuosa.
COO Evelyn Wang resigned due to personal reasons and will continue to assist the company in the merger process, Tudou said in a July 12 statement.
Baidu Inc., the biggest online search engine in China, declined 2.1 percent to $107.35, the lowest level since Oct. 3. The company is due to report second-quarter results on July 23 after U.S. trading closes, it said in a July 12 statement.
Thinkequity LLC analyst Henry Guo cut his 12-month price target for Baidu to $180 from $200, citing a “difficult macro environment.” He maintained a buy recommendation on the stock.
China’s finance ministry said in a statement yesterday profit at the nation’s state-owned enterprises in the first six months this year fell to 1.02 trillion yuan ($160 billion), down 12 percent from a year earlier. The firms’ revenue gained 11 percent to 19.8 trillion yuan, it said.
American depositary receipts of Aluminum Corp., the largest maker of the lightweight metal in China also known as Chalco, dropped 2.4 percent to $9.98.
Yanzhou Coal Mining Co., China’s fourth-largest coal miner, retreated 2 percent to $14.92. China’s benchmark price for power-station coal fell for a 10th week to the lowest level in more than eight months as electricity generation growth stalled amid slowing demand.
Coal with an energy value of 5,500 kilo-calories per kilogram at the Qinhuangdao port fell to a range of 635 yuan ($99.60) to 650 yuan a metric ton as of yesterday, according to data yesterday from the China Coal Transport and Distribution Association. The average of the range was 1.5 percent less than a week earlier and the lowest since Nov. 9, 2009, according to data from the association compiled by Bloomberg.
Huaneng Power International Inc. (600011), China’s largest electricity producer, fell for a fifth day, losing 1.6 percent to a one-month low of $27.81. China Petroleum and Chemical Corp., Asia’s biggest refiner, dipped 1 percent to $86.92.
China Medical Sinks
China Medical Technologies Inc. (CMEDY), a Beijing-based medical device company, tumbled the most on record in New York on its first day of trading following a two-week suspension by the U.S. Securities and Exchange Commission.
Its ADRs sank 68 percent to $3.50 in over-the-counter trading, the biggest drop since the company’s initial public offering in August 2005 on the Nasdaq Stock Market.
The SEC halted the company’s trading on June 29, citing “questions that have been raised about the accuracy and adequacy of publicly disseminated information,” according to a June 29 statement.
To contact the editor responsible for this story: Tal Barak Harif at email@example.com