Sina Jumps as Valuation Drop Spurs Rally: China Overnight
The Bloomberg China-US Equity Index of the most-traded Chinese equities in the U.S. added 0.7 percent to 91.91 yesterday. Sina, owner of the Weibo microblogging service, climbed the most in a week on prospects its advertising outlook will improve. Suntech Power Holdings Co. led a rally in solar makers after sliding over the previous four days. SouFun Holdings Ltd. (SFUN) sank the most in a month.
The average valuation on the China-US gauge dropped to a four-month low of 12.6 times estimated earnings April 1, while the ratio for the Hang Seng China Enterprises Index slipped to the cheapest level since October yesterday. Growth in Chinese manufacturing picked up in March, data this week showed, adding to signs the revival in Asia’s largest economy is accelerating. China emerged from a seven-quarter slowdown at the end of 2012.
“Chinese stocks are really cheap now, a buy opportunity as we had last year when valuations reached lows in history,” Michael Ding, lead manager of the China Region Fund (USCOX) at U.S. Global Investors Inc. in San Antonio, Texas, which oversees $2.2 billion said by phone. “So I didn’t sell anything. The Chinese economy is still in expansionary territory.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., was little changed at $36.49 in New York, after sliding in the previous two days. The Standard & Poor’s 500 Index (SPX) advanced 0.5 percent to 1,570.25 as orders placed with U.S. factories topped forecasts and Europe’s debt crisis eased.
Sina, based in Shanghai, surged 3.8 percent to $50.02, the highest close since March 20. Trading volume on the stock was 1.4 times the daily average over the past three months, data compiled by Bloomberg showed.
“We believe Weibo’s new model is accumulating advertisers steadily,” 86Research Ltd. analysts said in a note yesterday. “There is a pickup in advertiser number in March.”
The company predicted in February first-quarter sales of as much as $119 million, including advertising revenue of up to $96 million. More than 30 percent of advertising income on Weibo could come from mobile devices, Chairman and Chief Executive Officer Charles Chao said in February.
Alibaba Group Holding Ltd., China’s largest e-commerce company, is still in talks with Weibo for strategic cooperation, the National Business Daily reported April 1, citing an interview with Alibaba Chief Risk Officer Xiaofeng Shao. Alibaba’s founder, billionaire Jack Ma, said the company may use acquisitions to boost its growth through apps for smartphones and tablets in a conference in Hong Kong March 20.
Suntech, the biggest solar-panel producer in 2011, jumped 14 percent to 41 cents, rebounding from a record low in the previous day. LDK Solar Co., the world’s second-biggest solar wafer maker, gained 3 percent to $1.04, the steepest rally in two weeks. Yingli Green Energy Holding Co. (YGE), the largest solar panel maker globally by shipments, climbed 8.6 percent to $1.9, rising the first time since March 26.
Prices for polysilicon, the raw material for crystalline silicon solar panels, rose 11 percent in March, on renewed demand for downstream solar products, Bloomberg Industries analyst James Evans said in a report yesterday.
Semiconductor Manufacturing International Corp. (SMI), a Shanghai-based circuit foundry, surged 4.5 percent to $3.03. China Eastern Airlines Corp., the second-largest domestic carrier, advanced 3.2 percent to $22.14.
SouFun, owner of China’s largest real estate information website, dropped 6.9 percent to $23.71 in New York, the most in a month. The company had the biggest decline on the China-US gauge. E-House China Holdings Ltd. (EJ), a Shanghai-based property agent, sank 2.9 percent to $4.42, the lowest in four weeks.
“I’d rather be a buyer as much of the fluff has come out of valuations,” Dave Lutz, head of exchange-traded fund trading and strategy at Stifel Nicolaus & Co. in Baltimore, said by e-mail. “The risk reward favors being long in Chinese stocks.”
The Hang Seng China Enterprises measure in Hong Kong dropped 0.8 percent to 10,811.44, as trading resumed after a two-day public holiday. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares slipped 0.3 percent to 2,227.74 yesterday, the lowest level this year.
Twelve-month non-deliverable forwards on the Chinese yuan strengthened for a third day, adding 0.14 percent to 6.2878 per dollar in New York, the highest level since Jan. 24, data compile by Bloomberg show. The currency jumped 0.15 percent yesterday, the most this year, and rose beyond 6.20 per dollar for the first time in 19 years, according to the China Foreign Exchange Trade system. The yuan closed at 6.1986 per dollar in Shanghai yesterday.
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