Ctrip to Yanzhou Rally as Melco Premium Widens: China Overnight

Chinese stocks rose in New York as Ctrip.com International Ltd. jumped amid speculation China’s biggest online travel agency may be acquired, while Yanzhou Coal Mining Co. gained amid a rally in commodity shares.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. advanced 0.2 percent to a one-week high of 85.25 yesterday. Ctrip posted the biggest surge in two months and Yanzhou Coal rose for the first time this week. Qihoo 360 Technology Co. extended gains to a record while Melco Crown Entertainment Ltd. traded at the widest premium over Hong Kong-listed stock in two weeks.

Ctrip soared as much as 7.6 percent after Chinese technology news website DoNews reported that Tencent Holdings Ltd., China’s biggest Internet company by market value, is in talks with to buy a controlling stake. Shanghai-based Ctrip denied “rumors published on certain Chinese social media” in a statement, adding it isn’t in discussions with any third party on such a transaction.

“China’s online travel space has attractive growth potential, so a few big profitable Internet companies also want to get involved,” Henry Guo, a senior analyst at ABR Investment Strategy LLC, which does research on the Chinese Internet industry, said in a telephone interview from San Francisco. “Even if the company denied the rumor, this may still indicate some big buyers are looking for companies.”

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., advanced 0.3 percent to a one-week high of $32.45, rallying for a fourth day. The Standard & Poor’s 500 Index was little changed at a five-week high as investors analyzed minutes from the Federal Reserve’s last meeting for signs on when the central bank might slow the pace of bond purchases.

Trading Volume

Ctrip’s American depositary receipts surged 6.5 percent to $33.85, the biggest gain since May 9. Volume on the ADRs was more than twice the daily average over the past three months, data compiled by Bloomberg showed.

Ctrip’s shares are trading at 23 times estimated 12-month profit, compared with a multiple of 46 for its smaller domestic competitor Elong Inc. ADRs of Beijing-based Elong added 1.9 percent, the most in a month, to $13.74 in New York.

Yanzhou, China’s fourth-largest coal mining company, jumped 4.1 percent to $7.11 in New York, the steepest rally since June 21. Its stock surged 5.8 percent in Hong Kong trading yesterday and jumped 10 percent in Shanghai.

A surge in rare-earth stocks in Shanghai spilled over to other commodity sectors and Yanzhou has the lowest valuation among peers, Helen Lau, an analyst at UOB Kay Hian Holdings Ltd., wrote in a note to clients yesterday, adding the rally may not be sustainable.

Melco Advances

The gain in Yanzhou’s ADRs has pared their loss this year to 58 percent. The company’s valuation dropped to 9.5 times projected earnings on July 9, the lowest level since September.

Melco Crown, a Macau casino operator, climbed 2.2 percent to $22.01, rebounding from a two-week low reached the previous day. Its ADRs traded 1.6 percent above Hong Kong shares, the widest premium since June 27. Each ADR equals three underlying shares in the company.

The company was among the top picks of Aaron Fischer, an analyst at CLSA Ltd., who said recent weakness in some casino shares is a good buying opportunity as liquidity tightening concerns are “overplayed.”

Qihoo, a Beijing-based software developer which owns China’s second-biggest search engine, added 2.6 percent to a record $50.75.

Youku Slumps

Youku Tudou Inc., the biggest video website owner in China, sank 2.4 percent to $18.05 in New York, slumping for a third straight day. Bona Film Group Ltd. slumped 4 percent to $4.05, dropping the most on the China-US gauge.

China’s overseas shipments in June fell 3.1 percent from a year earlier, the most since the global financial crisis, data from the the nation’s customs showed yesterday. That compared with the median estimate of a 3.7 percent gain in a Bloomberg News survey. Imports dropped 0.7 percent, while the median projection was for a 6 percent increase.

“Exports were disappointing, and imports were surprisingly weak,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by e-mail yesterday. “China will have to use infrastructure spending and more fiscal stimulus to drive growth.”

The Hang Seng China Enterprises Index in Hong Kong climbed 1.8 percent to a one-week high of 9,215.08, while the Shanghai Composite Index jumped 2.2 percent to 2,008.13, the biggest gain since March.