Baidu Rises on Earnings as NQ Advances: China Overnight
The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. added 0.5 percent to 103.13, poised for a fourth monthly gain. Baidu, China’s biggest web search engine, rose to a one-week high. NQ Mobile jumped 11 percent, rebounding from a 62 percent tumble that followed Muddy Waters LLC’s Oct. 24 report alleging it inflated sales. Suntech Power Holdings Co. climbed after saying it may get a $150 million equity investment from a state-backed company.
Jefferies Group LLC and Brean Capital LLC raised their recommendations on Baidu to buy yesterday after the company’s third-quarter net income exceeded the average projection of 10 analysts compiled by Bloomberg. Baidu-controlled travel website Qunar Cayman Islands Ltd. increased the price of a planned initial public offering by as much as 26 percent. NQ continued to transfer cash deposits to Standard Chartered Plc.
“On top of fairly good earnings, Baidu’s growth in mobile app users and a pickup in mobile monetization are the bright spots,” Tan Chiheng, an analyst at Granite Point Capital Inc. (PTCI), which invests in Chinese equities, said by phone from Boston. “Muddy Waters’ allegations on NQ should be perceived as an individual case, and it won’t have big impacts on the sector or upcoming Chinese IPO deals.”
The iShares China Large-Cap ETF (FXI), the largest Chinese exchange-traded fund in the U.S., added 1.4 percent to $37.54 in New York in a third day of gains. The Standard & Poor’s 500 Index slipped 0.5 percent after the Federal Reserve fueled bets it will begin to cut stimulus even as it maintained the pace of monthly bond buying as expected.
American depositary receipts of Baidu added 3.5 percent to $164.93. Trading volume was almost four times the daily average of the past 90 days, according to data compiled by Bloomberg.
The Beijing-based company said Oct. 29 that third-quarter net income rose 1.3 percent from a year earlier to 3.05 billion yuan ($498 million). That beat the 3 billion-yuan average of 10 estimates compiled by Bloomberg. Baidu forecast fourth-quarter revenue of as much as 9.5 billion yuan, surpassing a 8.92 billion-yuan average of 15 analysts’ estimates.
NQ Mobile, also based in Beijing, jumped to $12.25. The mobile-services provider transferred an additional $25 million of deposits formerly held at Industrial Bank Co. to Standard Chartered, according to a statement yesterday. The company transferred $16.4 million on Oct. 29.
Suntech, the world’s largest solar-panel maker by shipments in 2011, climbed 10 percent to $1.40, set for the biggest gain this month.
Wuxi Guolian Development Group may combine other solar and related businesses it owns with Suntech, possibly as joint ventures, the panel producer said yesterday in a statement announcing it had received an investment letter of intent from Wuxi Guolian.
The Hang Seng China Enterprises Index in Hong Kong jumped 2.4 percent yesterday to 10,640.89, the largest gain in two months. The Shanghai Composite Index (SHCOMP) climbed 1.5 percent to 2,160.46, rising the most in a week.
The yuan fell for a fourth day yesterday, the longest losing streak since July, as the central bank cut the currency’s reference rate amid a rally in the dollar. The People’s Bank of China cut its fixing, which limits the yuan’s daily moves to 1 percent on either side, by 0.06 percent to 6.1412 per dollar, the weakest since Oct. 17.
The U.S. Treasury Department said in its semi-annual currency report to Congress released in Washington yesterday that the yuan is “significantly undervalued” and hasn’t strengthened as fast as needed, while declining to name the country a currency manipulator.
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