SouFun Climbs on Outlook as Solars Sink: China Overnight
The Bloomberg China-US Equity Index of the most-traded Chinese shares in New York climbed 0.5 percent to 97.67 yesterday in New York, the highest since May 11. Property website company SouFun surged to a seven-month high, while Focus Media Holding Ltd. rose a fourth day after agreeing to be acquired in the nation’s biggest leveraged buyout. Solar stocks retreated, paring monthly gains of at least 8.6 percent, amid speculation state support won’t boost profitability in the industry. LDK Solar Co. sank the most in two months.
The China-US gauge followed the Standard & Poor’s 500 Index higher after U.S. House Speaker John Boehner said he expects to keep working on a plan with President Barack Obama to avert more than $600 billion of tax increases and spending cuts due to come into force starting in January. The economy of the U.S., the biggest buyer of Chinese goods this year, grew 3.1 percent in the third quarter, more than previously reported.
“Anything that indicates that there are at least discussions, any type of progress, is going to help the equity market,” Timothy Ghriskey, chief investment officer at New York-based Solaris Group LLC, which manages about $2 billion, including Chinese stocks, said by phone yesterday. “If there were something more significant said, you would see a much bigger rise.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., climbed 0.7 percent to $39.75 in New York, the highest price in nine months. The ETF has risen 14 percent this year. The S&P 500 rose 0.6 percent to 1,443.69.
SouFun, owner of the largest real estate information website in China, jumped 7.5 percent to $25, the highest level since May 10. Trading volume was almost three times the daily average over the past three months, data compiled by Bloomberg show.
Focus Media’s American depositary receipts added 0.9 percent in their fourth day of gains to $25.74, the highest close since March 28.
The Shanghai-based digital advertising company agreed to be bought by a group of private-equity investors led by Carlyle Group LP, according to a Dec. 19 statement. The company’s ADRs will be bought for $27.50 each, higher than the initial offer of $27 apiece in August.
The transaction, valuing the company’s equity at about $3.7 billion, is scheduled to close in the second quarter of 2013 after approval from at least two-thirds of shareholders.
LDK, the world’s second-largest maker of solar wafers, tumbled 11 percent to $1.27, sinking the most in two months. The Xinyu, China-based company said in Dec. 14 filing that it was seeking consent from investors to take on more debt. The company will offer noteholders 10 yuan ($1.60) for every 10,000 yuan they hold in its notes due in 2014 with conditions including allowing LDK to take on more debt, according to the document.
Suntech Power Holdings Co. the world’s biggest solar-panel maker, based in China’s Jiangsu province, declined 4 percent to $1.21, the biggest slump in a month. Suntech’s advance this month was cut to 33 percent. Ten-day volatility on Suntech’s shares rose to 110 yesterday, the highest level since Nov. 14.
Subsidies for more than 100 new energy projects, tax breaks and tariff adjustments for the sector announced by China’s government in December have helped drive a 49 percent surge in Trina (TSL) Solar Ltd., the Guangzhou-based solar maker that is the biggest gainer on the China-US gauge this month.
While state assistance may bolster sales for some companies, it probably won’t stoke an increase in profitability for an industry hobbled by falling prices and a panel supply glut, according to Raymond James & Associates Inc.
Guangzhou-based Trina slid 3.4 percent to $4.21 in New York yesterday. Yingli Green Energy Holding Co. (YGE), based in Baoding, China, retreated 3.3 percent to $2.34.
“The measures so far are counterproductive, they should let bad companies go bankrupt and let capacity rationalization happen,” Alex Morris, an energy analyst at Raymond James, said by phone yesterday from Houston. “Investors should take the opportunity of this junk rally to actively short these solar stocks.”
Bona Film Group Ltd., a film production company, was the biggest decliner on the China-US measure, losing 13 percent to $4.28, the steepest slump since Dec. 9, 2010. Volumes were almost double the daily average over the past three months.
The Conference Board’s leading index for China’s economy released yesterday rose 1.1 percent in November, from a revised 1.6 percent gain in the previous month. Economic growth -- which slowed to 7.4 percent in the third quarter, the slowest pace since the first three months of 2009 -- may accelerate to 7.8 percent this quarter, based on the median estimate of economists surveyed by Bloomberg from Dec. 13 to 18.
Shanda Games Ltd. (GAME), China’s third-largest online games operator, rallied 3.3 percent to a three-week high of $3.17. Home Inns & Hotels Management Inc. (HMIN), the largest budget hotel chain operator in China, added 2.6 percent to $28.78, the highest close since Nov. 6.
The Hang Seng China Enterprises Index (HSCEI) slid 0.3 percent yesterday to 11,352.45, after rising in the previous two days. The gauge has climbed 14 percent in 2012. The Shanghai Composite Index (SHCOMP) gained 0.3 percent to 2,168.35, the highest level in four months, trimming its drop this year to 1.4 percent. The China-US measure has added 8.4 percent in 2012.
Twelve-month non-deliverable forwards on the yuan fell 0.08 percent to 6.3150 per dollar yesterday, weakening the most since Dec. 11, after the currency closed little changed versus the greenback at 6.2302 in Shanghai, according to the China Foreign Exchange Trade System.
China will increase the movement of the yuan exchange rate “appropriately” to handle an influx of liquidity amid new rounds of quantitative easing from the world’s central banks, the official Xinhua News Agency said in an editorial yesterday.
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