Airlines Drive ADR Rally as Baidu Surges: China Overnight

Chinese equities climbed for a second day in New York, led by Internet companies and airlines, as trade figures that beat economists’ estimates bolstered the case for a rebound in Asia’s biggest economy.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. rallied 1.1 percent to 101.9 by 12:57 p.m., poised for the highest in a week. Search engine Baidu Inc. posted the steepest two-day rally in a year while video website operator Youku Tudou Inc. jumped to a six-month high. China Southern Airlines Co., the nation’s biggest carrier, and China Eastern Airlines Corp. surged after they were classed as top picks by UOB Kay-Hian Holdings Ltd.

The benchmark gauge of U.S.-traded Chinese stocks is headed for its second weekly advance of 2013, buoyed by government data yesterday showing overseas shipments rose 14.1 percent last month from a year earlier, the most since May and more than double the 5 percent median of 40 economists’ estimates. Gains in December data, from retail sales to industrial output, indicate China is recovering from its seven-quarter slowdown.

“China’s economic growth certainly stabilized and might even pick up a bit from here, and its exports acceleration does reflect a broader recovery in the global economy,” Morgan Harting, who helps manage the $75 million Alliance Bernstein Emerging Markets Multi-Asset Portfolio fund, said by phone in New York yesterday. “It’s a good year for emerging markets. We’ve increased Chinese equities holdings over the past six months.”

Harting’s fund has outperformed 70 percent of its peers in the past month, rising 3.9 percent, according to data compiled by Bloomberg.

ETF Advances

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., added 1.3 percent to $41.52 in its second day of gains. The Standard & Poor’s 500 Index climbed

0.8 percent to a five-year high of 1,472.12, buoyed by the Chinese data and European Central Bank President Mario Draghi’s forecast that the euro area economy will return to health later in 2013.

The Hang Seng China Enterprises Index added 1 percent to 11,913.47 yesterday, the steepest advance in a week, while the Shanghai Composite Index of domestic shares increased 0.4 percent to 2,283.66, after falling the previous two days.

Baidu, which owns China’s most-used online search engine, climbed 6 percent to $110.57, the biggest surge since July 24. Its stock has risen 10 percent this year, after losing 14 percent in 2012.

Youku Jumps

Beijing-based Baidu started a computer security software in English and Thai, making the product accessible to users in Southeast Asia, according to TechinAsia’s website.

Youku, the Beijing-based operator of China’s biggest video websites, climbed 10 percent to $21.84, the highest since June

27. Trading volume on its shares was 1.8 times the daily average in the past three months, data compiled by Bloomberg show. Morgan Stanley held 7.1 percent of Youku Tudou’s shares as of the end of 2012, a regulatory filing made public Jan. 9 showed.

China Southern, based in Guangzhou, surged 7.4 percent to a one-year high of $28.47. China Eastern, the nation’s second-largest airline by market value, climbed 6 percent to $22.78, the highest level since September 2011.

Both carriers are among top picks in Asia’s aviation sector because of “attractive valuations,” K Ajith, an analyst at UOB Key-Hian in Singapore, wrote in a note to clients yesterday. China’s economic outlook is “positive,” while a recovery in cargo transport could be weak, according to the note.

Shanghai-based China Eastern’s passenger load factor, or the percentage of seats filled by paying customers, rose 1.5 percent last month from a year earlier to 77.4 percent, according to data released yesterday.

Chalco Gains

Aluminum Corp. of China Ltd., the largest producer of the light metal in the country, advanced 6.6 percent to $13.28, the highest level since March 2. Its American depositary receipts, each representing 25 underlying shares in the Beijing-based company known as Chalco, traded 1.2 percent above its Hong Kong stock, the widest premium in four days. The ADRs have traded higher than shares in Hong Kong for two straight weeks since Dec. 24.

Chalco’s unit Chinalco Mining Corp. planned to start gauging demand yesterday for an initial public offering in Hong Kong to raise as much as $400 million, said two people with knowledge of the matter on Jan. 9, who asked not to be identified because the information is private.

Suntech Volatility

Suntech Power Holdings Co., the world’s biggest solar-panel maker, retreated 4.8 percent to $1.78 in New York after surging 26 percent in the previous two days. Trading volume on its ADRs was 1.7 times the daily average over the past three months, data compiled by Bloomberg show. Thirty-day volatility on Suntech’s ADRs rose to 123 yesterday, the highest since December 2011.

The Bloomberg Chinese Reverse Mergers Index, which tracks a basket of companies that gained U.S. listings after buying firms that already trade, increased for a fifth day, adding 0.6 percent to an eight-month high of 78.88. Twelve-month non-deliverable forwards on the yuan strengthened 0.45 percent to

6.2685 per dollar yesterday in New York, the biggest one-day jump since Jan. 18, 2012. The currency was little changed at

6.2244 versus the dollar in Shanghai trading.

China’s national statistics bureau may report today consumer prices rose 2.3 percent last month from a year earlier, after gaining 2 percent in November, according to the median estimate of 42 economists surveyed by Bloomberg.

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