Melco Declines as New Engine Sinks Baidu: China Overnight
Chinese stocks slid to a nine-week low in New York as Melco Crown Entertainment Ltd. (6883) sank on concern over Macau gambling revenue and Baidu Inc. retreated after the introduction of a new search engine.
The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. slipped 0.9 percent to 95.52 yesterday. Melco, a casino operator in the Chinese territory of Macau, tumbled the most since Dec. 4 after HSBC Global Research said the city’s gambling revenue trailed its projections in February. Baidu, China’s most-used search engine, slid to a two-month low. Guangshen Railway Co. (GSH) surged 13 percent on prospects freight rates may be adjusted by the government.
The China-US gauge followed the Shanghai Composite Index (SHCOMP) lower amid concern policy makers will impose measures to damp property prices before next month’s National People’s Congress. Data this month showed new home prices in the country rose the most in two years in January. Mainland Chinese markets resumed trading Feb. 18 after the week-long Lunar New Year holiday.
“Talk about property measures is one reason behind the retreat in Chinese equities,” Edmund Harriss, who oversees $300 million as a fund manager at Guinness Atkinson Asset Management LLC in London, including Chinese stocks, said by phone. “People have just come back from the Chinese New Year and they are waiting to see what the new government’s new policies will be.”
The Chinese government may increase borrowing costs for second-home buyers, and may also boost down-payment requirements, the Shanghai Daily reported, citing an unidentified banking official.
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., fell for the first time in five trading days, losing 2.2 percent to $39.44 in New York, the lowest close since Dec. 24. The Standard & Poor’s 500 Index (SPX) gained 0.7 percent to 1,530.94 in the first day of trading this week after a U.S. holiday Feb. 18.
Melco’s American depositary receipts dropped 6.4 percent to $19.46, the biggest one-day slide since Dec. 4. The casino company’s ADRs, each representing three underlying shares, traded 6.4 percent below its Hong Kong stock, the widest discount since July.
Macau’s gambling revenue for the first 17 days of February came in at 15.2 billion patacas ($1.9 billion), below HSBC’s estimates, Sean Monaghan, a Singapore-based analyst at the bank wrote in a research note dated Feb. 18. VIP, or high-stakes, gamblers may have stayed away to avoid crowds during the New Year, according to HSBC.
Macau tourist arrivals pulled back to 127,412 Feb. 16 from a peak of 166,581 Feb. 12 during last week’s holiday, according to data compiled by Bloomberg from Macau government statistics. While arrivals from the Chinese mainland over the New Year rose 20 percent from a year earlier, that has not filtered into revenue growth for the industry, CLSA Ltd. said in a research note yesterday.
Beijing-based Baidu (BIDU) slipped 2.3 percent to a two-month low of $92.18 in New York. Goldman Sachs AG analysts led by Piyush Mubayi cut their price target for the company to $89 from $135 in a note issued yesterday. Goldman cited concern over Baidu’s ability to maintain its leadership of the search market as online queries are shifting away from desktop computers to mobile devices.
Alibaba Group Holding Ltd., China’s biggest e-commerce company, has introduced a search engine, the IDG News Service reported yesterday. Hangzhou-based Alibaba declined to say exactly when the site started, though it has been available since at least Feb. 18, according to IDG. The s.aliyun.com website is dubbed the Ali cloud search and directs users to hot topics, according to the search engine’s website.
“China’s search engine market will be very interesting and competitive in 2013,” Henry Guo, a senior analyst at research firm ABR Investment Strategy LLC, which focuses on technology and media companies, said yesterday by phone from San Francisco. “On the desktop side, Qihoo is the only threat to Baidu.”
A China Southern airplane returned to the city of Harbin after part of its exterior fell off mid-flight Feb. 18, China’s official Xinhua News Agency reported, citing the company’s branch in Heilongjiang province where the incident occurred. The aircraft was an Airbus A320, China National Radio reported on the same day.
Sina Corp. (SINA), owner of China’s Twitter-like Weibo service, lost 4.5 percent to $53.48 yesterday, the biggest drop in two weeks, before reporting fourth-quarter earnings after U.S. trading ended. The shares were little changed at $53.17 by 4:39 p.m. in after-market trading.
The Shanghai-based company forecast first-quarter adjusted net revenue of between $115 million and $119 million, compared with the median of seven analysts’ estimates for $117.4 million.
Investors were concerned that Sina may provide disappointing guidance for 2013 revenue due to the limited growth potential for Weibo and its “weak” news portal, Echo He, a senior analyst at Maxim Group LLC in New York, who rates Sina sell, wrote in a note released prior to the results.
Guangshen Railway, which runs the only train line linking the mainland with Hong Kong, jumped to $23.46 in New York, the steepest one-day advance since April 2009. The company had the biggest gain on the China-US gauge.
Shenzhen-based Guangshen said that it received a notice that China’s National Development and Reform Commission and the Railways Ministry are finalizing a detailed proposal on possible freight rate adjustments, according to a regulatory filing Feb. 18 to the Hong Kong stock exchange.
The Hang Seng China Enterprises Index (HSCEI) sank 1.8 percent to 11,525.70 yesterday, the lowest close since Dec. 31, while the Shanghai Composite slipped 1.6 percent to 2,382.91, the steepest retreat in a month.
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