Solars Drive Steepest Jump in 3 Months: China Overnight

Chinese stocks climbed a fifth week in New York, rallying the most since September, as manufacturing data added to signs the economy is recovering and as the U.S. budget deal boosted China’s second-largest trading partner.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. jumped 5.1 percent last week to

101.71, capping the longest stretch of weekly gains in 11 months. LDK Solar Co. surged 59 percent in the week, and Suntech Power Holdings Co. soared 34 percent, as China took more measures to lift solar energy demand. Web game developer Giant Interactive Group Inc. rallied 20 percent to a 16-month high, while Ambow Education Holding Ltd. sank 7.1 percent.

Data last week showing manufacturing expanded for a third month in December compounded evidence the economy is emerging from its slowdown, while legislation to avert U.S. spending cuts and tax increases burnished the outlook for China’s exports. Asia’s largest economy is poised to grow 8.1 percent this year, from 7.7 percent in 2012, according to the median estimates of 49 economists surveyed last month by Bloomberg.

“China’s economy will definitely rebound this year, and I would expect Chinese equities to do better,” Stephen Leeb, chairman of Leeb Capital Management Inc., said by phone in New York Jan. 4. “The U.S. economy starting to recover could be very positive as a strong U.S. economy is going to help all economies.”

House Prices

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., was little changed at $41.62 in New York Jan. 4, after rising 5.2 percent last week. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,466.47 for a 4.6 percent weekly jump, after a government report showed U.S. employers added workers last month and the jobless rate matched a four-year low.

E-House China Holdings Ltd. jumped to a more-than three-month high Jan. 4 after data showed new home prices in China gained for a seventh month.

American depositary shares of E-House surged 10 percent to $4.85, the highest level since Sept. 20. E-House climbed 18 percent last week. SouFun Holdings Ltd., the country’s biggest real estate website owner, added 12 percent in the week to $26.63, the steepest jump since November.

China’s Ministry of Housing and Urban-Rural Development said last month that it would support demand from residents seeking bigger homes this year, prompting speculation that authorities won’t add to property curbs such as higher down payments and home-purchase restrictions.

Solar Subsidies

LDK, the second-largest maker of solar wafers globally, jumped 11 percent Jan. 4 to $2.14, the highest price since June

21. Suntech, the world’s biggest solar-panel maker, rose 2.7 percent to a six-month high of $1.87. Yingli Green Energy Holding Co. climbed 23 percent in the week while Trina Solar Ltd. added 17 percent.

The Chinese government will provide a total 1.82 billion yuan ($290 million) in subsidies to 126 rooftop solar installation projects, renewing an aid program started in 2009, China Daily reported Jan. 4, citing the Ministry of Housing and Urban-Rural Development. Assistance will range from 7.5 yuan ($1.2) to 9 yuan per watt, the newspaper said.

HSBC Holdings Plc said in a Jan. 3 report that China will become the world’s largest solar market in 2013.

“China is going to spend tremendous amounts of money on renewable energy, and they’ve dramatically raised their targets for the energy over the past two years,” Leeb said. “Solar stocks were down last year and the industry is growing.”

Gamers Discounted

Giant Interactive, an online game operator based in Shanghai, surged to $6.48, rallying the most among the five web game developers included on the Bloomberg China-US gauge. Perfect World Co. gained 19 percent to an eight-month high of $12.68.

Shanda Games Ltd., Ltd., NetEase Inc., Giant and Perfect World traded at an average 6.7 times estimated earnings Jan. 3, compared with a multiple of 13.7 for stocks on the China-US measure, data compiled by Bloomberg showed. The discount gives them one of the most enticing valuations in the technology and Internet sector, Andy Yeung, a New York-based analyst at Oppenheimer & Co. whose ratings on the stocks range from market perform to outperform, said by phone Jan. 3.

Ambow Education, a Beijing-based provider of private tutoring services, tumbled to $2.34 and was the biggest decliner on the China-US gauge last week. Ambow’s American depositary receipts lost 68 percent in 2012, the worst annual performance on the index.

Hang Seng

Ambow reported in July a net loss for the three months through March of $12.7 million, compared with net income of $2 million a year earlier. It hasn’t published financial results since.

The company said Sept. 6 an internal probe found its tutoring centers are legally registered. The investigation was sparked by reports on Chinese state television that an Ambow unit exaggerated training results and that school registrations were incomplete.

The Shanghai Composite Index of domestic shares climbed 2 percent to 2,276.99 over the two days that it traded last week to 2,276.99, the highest level since June 20. The Hang Seng China Enterprises Index dropped 0.4 percent Jan. 4 to 11,937.45, paring its weekly advance to 4.9 percent, the most since January last year.

Before it's here, it's on the Bloomberg Terminal.