Dangdang Drives Decline as Outlook Cut: China OvernightBelinda Cao
Chinese equities fell for a second day in New York, led by E-Commerce China Dangdang Inc. and China Life Insurance Co., after the World Bank cut the nation’s 2013 economic growth forecast.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. slid 0.6 percent to a one-week low of 100.89 yesterday. Web retailer Dangdang slumped for a second day, driving its 10-day volatility to a three-week high. China Life slid to post the widest discount to Hong Kong stock in two months after Credit Credit Suisse Group AG cut its rating. Yanzhou Coal Mining Co. dropped to the lowest level this year while Trina Solar Ltd. sank the most since November.
The two-day slump in the China-US gauge cut its 2013 gain to 1.7 percent. The World Bank reduced its estimate for Chinese expansion to 8.4 percent from a June estimate of 8.6 percent, and eased its growth forecasts for the developed and emerging worlds. China, the world’s biggest exporter, sent about 30 percent of its shipments to the U.S. and European Union in 2012.
“We are still looking for a little more pull back in Chinese equities to buy after the strong rally earlier in the year,” Timothy Ghriskey, chief investment officer at Solaris Group LLC, which manages about $2 billion and sold holdings of Chinese stocks last year, said by phone from New York. “The World Bank may be just bringing its forecasts close to reality as its previous predictions were too high.”
The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., dropped 0.2 percent to $41.21, the lowest close this week. The Standard & Poor’s 500 index was little changed at 1,472.63.
China’s December economic data including industrial production and fixed-asset investment as well as a report on fourth-quarter gross domestic product are due tomorrow. Economic growth may have recovered to 7.8 percent in the fourth quarter from a year earlier, after sliding to a three-year low of 7.4 percent in the previous period, according to the median estimate of 53 analysts in a Bloomberg News survey.
Dangdang, the biggest online book retailer in China, slid 4.1 percent to $4.43, the biggest retreat in more than three weeks as the 10-day volatility on the stock surged to 67.3 yesterday, the highest since Dec. 27.
China Life’s American depositary receipts lost 2 percent to $51.05, trading 1.2 percent below its shares in Hong Kong, the largest discount since Nov. 14.
The Beijing-based insurer’s 2012 premium income was 322.7 billion yuan, up 1.4 percent from 2011, according to its filing to the Hong Kong stock exchange yesterday. Credit Suisse cut its recommendation on the company stock to underperform, or equivalent of sell, from neutral yesterday.
ADRs of Yanzhou, based in China’s Shandong province, slid 1.5 percent in its second day of declines to $17.65, the lowest level since Dec. 31.
China, the world’s top producer and consumer of coal, will commission 2,950 kilometers (1,833 miles) of coal-transporting rail lines after startup delays in 2012, Michael Parker, a Hong Kong-based analyst at Sanford C. Bernstein & Co. wrote in an e-mailed note yesterday.
“Rail capacity growth is a core aspect of our bearishness on the Chinese coal sector,” Parker wrote in the report. “As delayed projects are commissioned in 2013, paths to market will expand and pressure on coal price will persist.”
China’s Qinhuangdao coal price, the benchmark for thermal coal, was unchanged for a third week as of Jan. 13 after dropping to a four-month low of 620 yuan ($99.7) to 630 yuan per ton, according to data from the China Coal Transport and Distribution Association.
Trina Solar, China’s third-largest solar maker, fell 7.3 percent to $5.1, the biggest loss since Nov. 20. Its ADRs have advanced 18 percent in 2013. Trading volume on Trina’s ADRs was 2.9 times the daily average over the past three months, Bloomberg data showed. Yingli Green Energy Holding Co., the fourth-largest Chinese solar manufacturer, fell 3.4 percent to $2.8, paring its gain this year to 19 percent.
New Oriental Education & Technology Group Inc., the biggest private educational service provider in China, dropped 3.2 percent to $19.13, after rising in the previous two days.
Beijing-based New Oriental is scheduled to report earnings on Jan. 29 for the three months ended Nov. 30. The company may report a net loss of $6.46 million, according to the average estimate of four analysts surveyed by Bloomberg. That would be the first quarterly loss since the quarter ended May 31, 2007.
21Vianet Group Inc., an Internet data-center service provider based in Beijing, jumped 6.9 percent to $10.25, the biggest gainer on the China-US gauge.
The Bloomberg Chinese Reverse Mergers Index, which tracks a basket of companies that gained U.S. listings after buying firms that already trade, was little changed at 78.67, after a two-day advance.
The Hang Seng China Enterprises Index declined 0.8 percent from a five-month high to 11,907.52, while the Shanghai Composite Index of domestic Chinese shares slumped 0.7 percent to 2,309.50 in its first decline in three days.
Chinese regulators are accelerating approvals for overseas firms to buy the country’s securities at a record pace as local investors abandon equities.
The State Administration of Foreign Exchange, China’s top foreign-exchange management agency, awarded $15.8 billion of quotas for qualified foreign institutional investors to trade stocks and bonds in 2012, according to regulatory data compiled by Bloomberg. That’s more than the previous five years combined.