Shanda Surges on New Mobile Game as Sohu Rises: Overnight

Chinese equities rose in New York as Shanda Games Ltd. surged after the successful start of a new mobile game. Inc. climbed on speculation its search engine unit will be acquired.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. gained 0.2 percent to a five-week high of 89.88 yesterday. Shanda soared 17 percent, while Sohu advanced to the highest level since October 2011. Sina Corp. rallied for a fourth day and E-Commerce China Dangdang Inc. surged to a one-month high. LightInTheBox Holding Co. retreated.

Million Arthur, the mobile game from Shanda’s South Korean unit Actoz Soft Co. that debuted in China yesterday, was No.3 by sales on Apple Inc.’s store, the Shanghai-based company said in a statement. Sogou, the online search unit of web-portal operator Sohu, will be valued at as much as $1.2 billion in a possible sale, according to ABR Investment Strategy LLC.

“Shanda’s stock is up strongly due to the high ranking of this mobile game,” Nick Ning, a Shanghai-based analyst at 86Research Ltd., said by e-mail. “Investors take this high ranking as an indicator of strong revenue and earnings growth for the short term. They want exposure to China’s rapidly growing mobile game market.”

The iShares China large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., dropped 0.6 percent to $33.63, sliding for the first time this week. The Standard & Poor’s 500 Index gained 0.5 percent as earnings from Morgan Stanley and UnitedHealth Group Inc. beat estimates and jobless claims fell amid testimony from Federal Reserve Chairman Ben S. Bernanke.

Active Users

Shanda’s American depositary receipts surged to a 14-month high of $5.25, jumping the most since March 2011.

First-day active users for Million Arthur’s China edition have exceeded the combined first-day numbers in Japan, Korea and Taiwan, Shanda said in the statement.

It will take time to see how sustainable the game’s success will be and to assess Shanda’s position in mobile gaming, according to Ning at 86Research. The company is the third-largest online game company in China based on first-quarter sales, Ning said.

Sohu climbed 2.5 percent to $68.10 in New York, the highest close since October 2011. The shares have surged 32 percent since the end of April.

Chairman and Chief Executive Officer Charles Zhang said in a May 18 interview in Beijing that the company was seeking strategic investors for its Sogou search unit.

Acquisition Speculation

Sohu’s recent gains were stoked by speculation that Qihoo 360 Technology Co., owner of China’s second-biggest search engine, will acquire a controlling stake in Sogou, ABR Investment analyst Henry Guo wrote in a note yesterday.

“If a possible Qihoo/Sogou deal values Sogou at $1.2 billion or higher, a deal announcement could be a positive to Sohu shares,” he wrote.

Qihoo’s ADRs advanced 2.9 percent to a record $57.32, capping a 93 percent surge this year. Sina Corp., which runs a Twitter-like service in China, jumped 8.2 percent in a fourth day of gains to $65.10, the highest level since September. Youku Tudou, operator of China’s biggest video websites, rallied 3.9 percent to $20.47, the strongest close in a month.

Dangdang, the nation’s biggest online book retailer, climbed for a second day, gaining 4.7 percent to a one-month high of $8. LightInTheBox, the online retailer that was listed in the U.S. in June, retreated 5 percent to $16.78, after a 16 percent surge the previous day sent it to a record $17.66.

The Hang Seng China Enterprises Index in Hong Kong climbed

0.1 percent to a one-week high of 9,492.07, while the Shanghai Composite Index dropped 1.1 percent to 2,023.40, the lowest in a week.

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