Dangdang Drops as Fuel Sinks Airlines: China Overnight
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. slipped 0.3 percent to 100.31 yesterday, trimming its advance this month to 1.2 percent. Solar maker LDK sank the most in three weeks after chief executive officer filed to sell more shares, while online retailer Dangdang dropped to the lowest level this year. China Eastern Airlines Corp. (CEA) fell for the first time in three days and China Southern (ZNH) Airlines Co., the nation’s biggest carrier, posted the steepest one-day slide since Jan. 3.
The China-US gauge dropped after data showed that U.S. gross domestic product unexpectedly fell in the fourth quarter. China’s economy, which relies on the U.S. as its second-largest trading partner, is showing signs of a rebound with industrial output and retail sales rising. Economic growth accelerated for the first time in eight quarters in the last three months of 2012. Jet kerosene rose to a three-month high in Singapore.
“In China, the economy has not completely recovered, it’s still finishing the process,” Michael Ding, lead manager of the China Region Fund (USCOX) at U.S. Global Investors Inc., which oversees $2.2 billion, said by phone from San Antonio, Texas. “Investors are still looking at the momentum of the growth, with investment and consumption as drivers of GDP.”
The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., gained 0.1 percent to a one-week high of $41.59 in New York. The Standard & Poor’s 500 Index (SPX) slid 0.4 percent, the most this year, to 1,501.96. The Federal Reserve said in Washington that it will maintain its bond buying program to bolster the economy.
The Hang Seng China Enterprises Index (HSCEI) of Hong Kong-traded shares climbed 0.8 percent to 12,172.24 yesterday. The Shanghai Composite Index (SHCOMP) jumped 1 percent to 2,382.48 to the highest close since May 30. It is up 21 percent from a Dec. 4 low.
LDK, the second-biggest maker of wafers for solar panels, fell for a fourth day, dropping 8.3 percent to a four-week low of $1.54. Chief Executive Officer Xiaofeng Peng filed for the fifth time this month to sell shares in Xinyu, China-based LDK, which has more than $3.1 billion in debt.
LDK New Energy Holding Ltd., LDK Solar’s controlling shareholder which is wholly-owned by Peng, filed on Jan. 18 to the U.S. Securities and Exchange Commission to sell 394,000 ADRs, increasing its stake sale since Nov. 29 to 4.7 million ADRs, a document made public yesterday showed. Total proceeds from the sales would add up to $7.3 million, the filing showed.
American depositary shares of China Eastern, the country’s second-largest carrier by passenger numbers, fell 2.3 percent to $22.65 to trade at a 0.7 percent discount to the Shanghai-based company’s Hong Kong stock. One ADS is equal to 50 ordinary shares. ADRs of China Southern, based in Guangzhou, dropped 2.5 percent to $29.26, slumping the most since Jan. 3.
Jet kerosene prices have risen 4.3 percent in January, the biggest monthly gain since August. Prices rose 3.3 percent last year, the smallest increase since 2006.
Technology stocks dropped as investors wait for results from Baidu (BIDU) Inc., the Chinese Internet company that reports fourth-quarter earnings Feb. 4, U.S. Global’s Ding said. Shareholders are also looking for a recovery in Chinese advertising, which drives growth in the sector, he said.
Baidu, China’s most-used Web search engine, slipped 0.4 percent to $108.98 in a second day of declines. The Beijing-based company will report that adjusted net income rose to 2.9 billion yuan ($466 million) in the last three months of 2012, according to the average of 12 analysts’ estimates compiled by Bloomberg. Adjusted profit was 2.04 billion yuan in the fourth quarter of 2011.
Qihoo 360 Technology Co. Ltd., a Beijing-based software provider, fell 2.3 percent to $30.43, the lowest close since Jan. 2.
Dangdang, the biggest online book retailer in China, slid 3.4 percent to $4.21, the lowest level this year. Ten-day volatility on the Beijing-based company’s stock sank to 38.5, the lowest level since Oct. 31.
SouFun Holdings Ltd. (SFUN), owner of the largest real estate information website in China, fell 3.3 percent to $25.77. The stock earlier tumbled as much as 12 percent, triggering the Securities and Exchange Commission’s alternative uptick rule to restrict short selling from further driving down the price. SouFun has dropped for the past five days, its longest streak of declines since August.
Huaneng Power International Inc. (902) gained for a fourth day in New York, adding 2.8 percent to a five-year high of $39.96. China’s top electricity producer sees its 2012 net income rising more than 340 percent, according to a preliminary earnings statement posted to the Shanghai Stock Exchange yesterday.
New Oriental Education & Technology Group Inc. (EDU) rose 2.2 percent to $16.72, the steepest advance in two weeks. The company, which has lost 14 percent this year, was recommended as a long research tactical idea at Morgan Stanley. Nomura downgraded to stock to neutral from buy.
China’s yuan-denominated stocks are poised to outperform all Group of 20-nation equity markets in 2013 after posting the second-worst performance among global economies over the past three years, according to Citigroup Inc. The Shanghai A-share index may rise a further 12 percent from yesterday’s close of 2,493.78 to 2,780 in the first half, Minggao Shen, the Hong Kong-based head of China research at Citigroup, said by e-mail yesterday.
The Bloomberg Chinese Reverse Mergers Index, which tracks a basket of companies that gained U.S. listings after buying firms that already trade, retreated 0.1 percent from an eight-month high to 80.
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