Vipshop Surges as Earnings Fuel Rebound: China Overnight
Chinese stocks rose in New York for the first time in six days, led by Vipshop Holdings Ltd. (VIPS) and Elong (LONG) Inc., as companies report better-than-estimated earnings amid a recovery in the world’s second-largest economy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese equities in the U.S. climbed 0.7 percent to 93.96 by 12:05 p.m., paring a weekly drop of 2.5 percent. Vipshop surged 11 percent after the online fashion discounter reported its first quarterly profit and said it will sell more shares. Elong, China’s second-biggest Internet travel agency, jumped the most this month, while Yingli Green Energy Holding Co. (YGE) gained 3.2 percent on higher solar-panel shipments.
The 15 companies on the China-US gauge that have reported over the past month posted earnings that were on average more than triple analysts’ estimates, after results fell below projections by 9.1 percent in the previous quarter, data compiled by Bloomberg show. China’s economy emerged from its seven-quarter slowdown in the three months to Dec. 31, when Vipshop earned net income more than eight times the mean of two analysts’ estimates.
“We have pretty healthy expectations for company earnings growth,” Marc Tommasi, head of global investment strategy at Manning & Napier Advisors LLC, which manages $45 billion in assets including Chinese equities, said by phone from Rochester, New York. “Chinese stocks are not overpriced. The Chinese economy troughed in the third quarter, a modest expansion is what’s in store.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., was little changed at $38.48 in New York, declining 4.5 percent in the week. The Standard & Poor’s 500 Index (SPX) climbed 0.5 percent to 1,509.27, trimming its loss this week to 0.6 percent, the first drop since the end of December. Stocks on the Bloomberg China-US measure trade at 13.19 times estimated earnings, compared with a multiple of 13.29 for the S&P 500.
The Hang Seng China Enterprises Index (HSCEI) slid 1 percent to 11,317.13 yesterday for a weekly loss of 4.5 percent, while the Shanghai Composite Index of domestic Chinese shares dropped 0.5 percent to 2,314.16, dropping 4.9 percent in the week.
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