Yanzhou Discount Swells as Solars Slump: China Overnight

Chinese equities slid the most in 10 months in New York after the Asian nation posted first-quarter growth below economists’ forecasts, driving the Shanghai Composite Index down 10 percent from a February high.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. tumbled 3.3 percent to 87.02 yesterday, the biggest decline since June 21. Yanzhou Coal Mining Co., China’s fourth-largest producer of the fuel, plunged 7.4 percent to trade at the biggest discount to its Hong Kong stock since October after power-station coal prices fell to the lowest level since 2009. Home Inns & Hotels Management Inc. fell the most in 18 months and Suntech Power Holdings Co. plunged 23 percent.

China’s gross domestic product rose 7.7 percent in the first three months of this year, according to government data released yesterday, below the 8 percent median of 41 economists’ forecasts compiled by Bloomberg. The economy emerged from a seven-quarter slowdown in the fourth quarter, expanding 7.9 percent. The Shanghai Composite gauge of domestic Chinese shares dropped to the lowest level since Dec. 24.

“It’s disappointing,” Mark Luschini, the chief investment strategist at Janey Montgomery Scott LLC, which manages $55 billion in assets including Chinese equities, said by e-mail from Philadelphia. “While most countries would be elated with 7.7%, it is a setback from 7.9% in the fourth quarter.” The data is “not good for Chinese or emerging market stocks, or commodities,” he said.

ETF Plunges

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., dropped 3 percent to $34.92 in New York, losing the most since June. The Standard & Poor’s 500 Index slid 2.3 percent to 1,552.36, the biggest slump in five months.

Stocks extended losses after two explosions at the finish line area of the Boston Marathon.

Yanzhou’s American depositary receipts plunged to $11.13 in New York, the lowest since May 2009. Its ADRs traded 3.8 percent below Hong Kong-traded stock, the biggest discount since Oct. 26. Each ADR stands for 10 underlying shares in the Shandong-based company.

China’s benchmark price for thermal coal fell from a week earlier to 605 yuan ($97.8) to 620 yuan a metric ton, data from the China Coal Transport and Distribution Association showed yesterday. That was the lowest price since October 2009, according to data compiled by Bloomberg. Stockpiles of coal, which fuels about two-thirds of the China’s power, rose to 7.19 million metric tons at the Qinhuangdao port.

Power output in China increased 2.1 percent to 419.4 billion kilowatt-hours last month, data from the National Bureau of Statistics showed yesterday. That’s the smallest gain since September, excluding February, when output fell 13.7 percent as factories shut the Lunar New Year holiday.

Price Pressure

Home Inns, the biggest budget hotel chain operator in China, sank 8.9 percent to $24.77, the biggest slide since September 2011. The Shanghai-based company is scheduled to report first-quarter results on May 13 after U.S. market closes.

“Most budget hotel vendors released some low-price promotions in the first quarter, which could elevate occupancy rate in the weak season but give pressure to the ADRs,” Tian X. Hou, the founder of T.H. Capital LLC, which does researches on U.S.-traded Chinese equities, said in a note yesterday.

China’s industrial output in March rose 8.9 percent, the National Statistics Bureau said yesterday. That compared with the median estimate of 10.1 percent in a Bloomberg survey. Chinese lenders issued 1.06 trillion yuan ($171 billion) of new loans in March, exceeding the 900 billion-yuan median of economists’ projections compiled by Bloomberg before the central bank’s report April 11.

‘Very Bad’

“It’s very bad that China’s credit expansion failed to fuel an acceleration of economic activity,” Michael Shaoul, the chairman of Marketfield Asset Management LLC in New York, which oversees more than $6 billion, said by e-mail.

Phoenix New Media Ltd., a Beijing-based Internet, TV and mobile-news provider, lost 6.5 percent to $3.75, the biggest decline since August. Trading volume on its ADRs was more than twice the daily overage over the past three months, according to data compiled by Bloomberg.

China Petroleum and Chemical Corp., Asia’s biggest oil refiner known as Sinopec, slid 4.5 percent to $108.35, the lowest level since Dec. 4. Jefferies Hong Kong Ltd. analyst cut the rating on Sinopec to an equivalent of sell yesterday from hold. The 12-month price target was also slashed to $7.25 from $8. A 2.3 percent discount in the ADRs to its Hong Kong shares was the widest in two months.

Suntech Tumbles

Suntech Power, whose main unit was forced into bankruptcy after defaulting on a $541 million bond repayment last month, plunged to 58 cents in New York, sinking the most since March 21. Thirty-day volatility on the stock surged to 213 yesterday, the highest level since January 2009, and compared with a three-month average of 128, data compiled by Bloomberg showed.

LDK Solar Co. fell 8.2 percent to $1.12, while Yingli Green Energy Holding Co. dropped 7.1 percent to $1.97. Trina Solar Ltd. retreated 7.6 percent to $3.87 in New York.

The Hang Seng China Enterprises Index in Hong Kong sank 2 percent to 10,440.76, falling the most in a week, while the Shanghai Composite lost 1.1 percent to 2,181.94, retreating for a third day.