Chalco Fall Fuels Worst ADR Week in Four Months: China Overnight

Aluminum Corp. of China Ltd. led declines among Chinese companies traded in New York, helping fuel the benchmark index’s biggest weekly slump in four months, after the metal producer was cut from a Hong Kong stock index.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. sank 1.8 percent to 86.42 yesterday for a weekly retreat of 4.2 percent. Beijing-based Aluminum Corp., known as Chalco, tumbled 8.9 percent to the lowest level since 2008, while China Southern Airlines Co. dropped to the lowest price since September. Bona Film Group Ltd. plunged the most this year while PetroChina Co. slid after Goldman Sachs Group Inc. cut its price target.

The China-US gauge’s fourth retreat in five weeks has left its members trading at 11.8 times estimated profit on average, the lowest level since April, data compiled by Bloomberg show. American depositary receipts of loss-making Chalco, China’s biggest aluminum maker, traded at a discount to Hong Kong shares after it was removed from the Hang Seng China Enterprises Index.

“Expectations for a rebound in the Chinese economy weren’t realized as seen from the latest economic data,” Qinwei Wang, an economist focused on China at Capital Economics Ltd., a London-based research firm, said in a phone interview. “Even if we see a rebound in the near future after recent weakness in the stocks, it won’t be strong due to the lack of notable recovery signs in the economy. Big commodity producers won’t perform well as China’s investment slows.”

ETF Sinks

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., retreated 2.7 percent to $33.98, the steepest slump in two months. It lost 4.7 percent for the week. The Standard and Poor’s 500 Index slipped 0.6 percent to 1,626.73, falling 1 percent for the week.

Chalco’s ADRs slid to $8.37 in New York, taking its weekly decline to 11 percent, the most since November 2011.

The company’s Hong Kong-traded stock was removed from the Hang Seng China enterprises gauge effective after markets closed yesterday, according to statement posted on the website of the Hang Seng Indexes Co. May 10 after a quarterly review of its components.

ADRs of China Southern, Asia’s biggest carrier by passenger numbers, tumbled 5.5 percent to $21, the lowest price in nine months.

PetroChina, the nation’s biggest oil producer, fell 3.9 percent to $105.75, the lowest level since June 2010. The ADRs of the Beijing-based company traded 0.8 percent below its Hong Kong shares, erasing a 2.8 percent premium reached on June 13. Each ADR is equivalent to 100 underlying shares in the Beijing-based company.

Goldman Sachs analyst Arthur Yan reduced the price target for PetroChina to $129 on June 13 from $146.

Bona Tumbles

Bona Film, a Beijing-based filmmaker, plunged 7.6 percent to $3.90, the lowest level since December 2011. Trading volume on the stock was more than five times the daily average over the past three months, data compiled by Bloomberg showed.

The Hang Seng China gauge in Hong Kong dropped 0.2 percent to 9,667.42, extending a 12-day decline that was the longest since 1993. Its weekly loss of 5.1 percent was the biggest in 13 months. The Shanghai Composite Index climbed 0.6 percent to 2,162.04, after falling for eight days.

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