Chalco Sinks to 2008 Low as Manufacturing Drops: China Overnight
Chinese stocks traded in New York fell to a one-month low, led by commodity producers, after manufacturing indexes signaled production in the world’s second-largest economy slowed further in August.
The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. slumped 0.9 percent to 87.14 yesterday, the lowest level since Aug. 2. Aluminum Corp. of China Ltd., the nation’s largest maker of the metal, tumbled to the lowest since 2008 and PetroChina Co., the largest oil explorer, traded at the biggest discount to Hong Kong shares in a week. Renren Inc. (RENN) plunged to a seven-month low on concern the company’s shift in focus may not boost profitability.
A government Purchasing Managers Index declined to 49.2 in August from 50.1 in July, the statistics bureau said Sept. 1, while a separate PMI report released Sept. 3 by HSBC Holdings Plc and Markit Economics was at 47.6, indicating the fastest contraction in more than three years. China’s economic growth has decelerated for six quarters, expanding at the slowest pace since 2009. The People’s Bank of China has held off signaling further easing measures after two interest-rate cuts this year.
“Investors are frustrated that nothing has happened just yet in China after data showed manufacturing keeps contracting,” Michael Gayed, chief investment strategist at Pension Partners LLC, which advises on more than $150 million in assets, said by phone yesterday from New York. “A rally in Chinese stocks is being held back. The underperforming market may pressure China to stimulate alongside the Federal Reserve and the European Central Bank.”
China ETF Sinks
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., plunged 1.8 percent yesterday to $32.46, the steepest slump since July 23. The Standard & Poor’s 500 Index of the biggest U.S. shares was little changed at 1,404.94, as speculation European leaders will announce new steps to tame the debt crisis tempered concern the economic recovery is slowing.
Federal Reserve Chairman Ben S. Bernanke said Aug. 31 that he wouldn’t rule out steps to lower a jobless rate he described as a “grave concern.” The European Central Bank will hold a policy meeting tomorrow during which President Mario Draghi may unveil details of his bond-purchase plan to lower borrowing costs.
American depositary receipts of Aluminum Corp., also known as Chalco, lost 3.1 percent to $9.36, the lowest level since Nov. 20, 2008.
The Beijing-based company said Sept. 3 it dropped its C$925 million ($938 million) bid for Mongolian coal producer SouthGobi Resources Ltd. (SGQ) as it’s unlikely to win regulatory approval. Chalco’s plans to acquire a stake in SouthGobi have been hindered by the Mongolian government, which passed a law in May restricting foreign state-owned companies from controlling key assets.
Chalco, which proposed in April to buy a stake in coal trader Winsway Coking Coal Holding Ltd. may abandon the plan after withdrawing the bid for SouthGobi, Simon Francis, Hong Kong-based regional head of metals and mining at HSBC Holdings Plc, said in a report yesterday.
PetroChina’s ADRs sank for a sixth day, declining 2 percent to $117.86, the lowest level since December. Its ADRs, each representing 100 underlying shares in the oil producer, traded 2.1 percent below Hong Kong shares, the biggest discount in a week. China Petroleum and Chemical Corp., the nation’s second-largest oil company, slumped 3 percent to $91.38, the biggest tumble in three months.
Oil futures for October delivery slipped 1.2 percent to $95.30 a barrel on the New York Mercantile Exchange, after the Institute for Supply Management’s U.S. factory index declined more than analysts forecast and manufacturing contracted more than initially estimated in the euro area.
Yanzhou Coal Mining Co., China’s fourth-largest producer of the fuel, retreated 2.6 percent to $14.05, the lowest level since October 2009.
Coal inventories at the Chinese port of Qinhuangdao rose 6.8 percent to 6.95 million metric tons from a week ago, the first increase in seven weeks, according to the Sept. 3 data from the China Coal Transport & Distribution Association.
Renren, operator of a real-name social networking website in China, tumbled 7 percent to a seven-month low of $3.56 in New York.
The Beijing-based company is looking beyond online advertising to mobile games business for profits, the Wall Street Journal reported Sept. 3, citing an interview with Chief Executive Officer Joe Chen.
“Investors are worried the company’s shift from its core business, and its possible acquisitions to expand into new areas, may also mean cash burning,” Andy Yeung, a technology and Internet companies analyst at Oppenheimer & Co., said by phone from New York yesterday. “Games may be good for social media platforms at the beginning, but can’t drive these companies’ long-term growth.”
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