Web Stocks Sink on State Rules as E-House Jumps: China Overnight
Chinese equities fell in New York, after posting the longest stretch of weekly gains since October, as concern the government will take stricter measures to control the nation’s online access sent Internet stocks lower.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares lost 0.7 percent to 95.72 in New York, after a shortened trading day yesterday for the Christmas holiday. The measure has climbed 6.3 percent this year. Sina Corp. (SINA), owner of the Twitter-like Weibo service in China, dropped the most in three weeks and Sohu.com Inc. (SOHU) retreated from a six-month high. E-House China Holdings Ltd. (EJ) surged the most in two weeks.
The Standing Committee of the National People’s Congress, China’s lawmaking body, will decide this week on proposed legislation that would require Web users to register their real names to gain Internet access, the Xinhua news agency reported yesterday. The People’s Daily newspaper, published by the ruling Communist Party, has featured during the past week front-page editorials calling for more regulation of the Web, saying the “chaotic Internet” needs to be controlled.
“Investors showed fear in the past whenever talks about such Internet restrictions came up,” Jeff Papp, a senior analyst at Oberweis Asset Management, which invests in Chinese companies, said by phone from Lisle, Illinois yesterday. “Those Chinese Internet company’s products like Weibo have become so mainstream, it’s hard to imagine the government would want to adversely impact the business.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., declined 0.3 percent to $39.14. The ETF has risen 12 percent this year. The Standard & Poor’s 500 Index dropped 0.2 percent to 1,426.66 on concern President Barack Obama and Congress will fail to agree on a budget by the end of the year.
The Hang Seng China Enterprises Index (HSCEI) advanced 0.4 percent yesterday to 11,270.94, extending the gauge’s rally in 2012 to 13 percent. The Shanghai Composite Index (SHCOMP) climbed 0.3 percent to 2,159.05, trimming its loss this year to 1.8 percent.
Shares of Shanghai-based Sina dropped 1.6 percent to $47.31, the steepest slump since Dec. 4. A three-day decline has sent the company’s stock down 9 percent this year.
Sohu.com, which runs China’s fifth-most visited website, fell 2.3 percent to $43.47 for the biggest retreat since Dec. 7. The Beijing-based company has declined 13 percent in 2012. 21Vianet Group Inc. (VNET), China’s biggest independent Internet data- center operator, slid 4.3 percent to $8.83 in its third day of losses, down 3.5 percent this year.
E-House, a real estate brokerage based in Shanghai, jumped 14 percent to $4.16, the steepest rally in two weeks, after sinking 13 percent on Dec. 21.
It’s the company’s policy not to comment on the movement of its stock price, Jessica Barist Cohen, a New York-based spokeswoman for E-House, said in an e-mailed response to questions yesterday.
The company will sell as many as 17.8 million new shares for $3.52 each to its executives, using the funds to repurchase the company’s American depositary receipts on the open market at a later date, it said in a Dec. 10 statement.
Ella Ji, an analyst at Oppenheimer & Co. in New York, said by e-mail yesterday the company’s share repurchase plan is still going on. She rates the shares the equivalent of buy.
AutoNavi Holdings Ltd. (AMAP), a Beijing-based digital map content provider, slumped 5.5 percent to a two-week low of $10.88, posting the biggest decline on the Bloomberg China-US index.
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