SouFun Drives Gains as Baidu Advances: China Overnight

Chinese equities trading in the U.S. rose to the highest in seven months, led by Baidu Inc. and SouFun Holdings Ltd., on prospects the nation will meet its economic growth target.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. added 2.6 percent to 97.47 yesterday in New York, the highest since Feb. 6. Baidu, owner of China’s largest Internet search engine, gained after saying it will sell smart TVs, while real-estate information website SouFun jumped 13 percent to a record high. Suntech Power Holdings Co. slipped as the solar company said it will convert debt to equities as part of a restructuring plan.

Premier Li Keqiang said yesterday that he’s confident the nation will achieve this year’s goal of 7.5 percent growth. Goldman Sachs Group Inc. raised its estimate for China’s 2013 growth to 7.6 percent from 7.4 percent yesterday, after an identical revision by JPMorgan Chase & Co. on Sept. 1. China is taking measures including tax breaks for small companies and accelerated railway construction to sustain growth after expansion slowed for a second quarter.

“Things are moving back in the right direction,” said Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million of assets, said in a telephone interview from Lisle, Illinois yesterday. “The key is that China macro data and other indicators like increased rail spend indicate China’s economy has bottomed. In the Internet space, clearly you get really good growth.”

ETF Gains

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., advanced 3.1 percent to $36.23, the biggest jump in three weeks. The Standard & Poor’s 500 Index added 0.4 percent as data showed U.S. manufacturing expanded in August and construction spending increased in July.

Baidu rose 0.5 percent to $136.17. The company said yesterday that it will start selling smart TVs with TCL Multimedia Technology Holdings Ltd. in order to compete with Alibaba Group Holding Ltd. in the growing online video business.

SouFun, China’s biggest property market information website, surged to $47.12, the highest since the company’s 2010 U.S. offering. JPMorgan assigned a new buy rating on Aug. 30 with a target of $49. China’s new home prices jumped 8.6 percent in August, the most since December, SouFun said on Sept. 2.

China Petroleum and Chemical Corporation, or Sinopec, advanced 6.1 percent, the most since January 2012, to $76.38. Sinopec’s Shanghai Petrochemical Co. is studying the possibility of building a 1 million-ton paraxylene factory, Chairman Wang Zhiqing said at a media briefing in Hong Kong yesterday. Wang also said operational results over the past two months showed that Sinopec’s profit will increase in the third quarter, compared with the first half of the year.

Sinopec Discount

Sinopec’s shares traded 0.8 percent lower than its equivalent shares in Hong Kong, narrowing its discount from 2.9 percent on Sept. 2 when the U.S. markets were closed for a holiday, according to data compiled by Bloomberg.

Suntech, whose biggest unit was forced into bankruptcy this year, lost 1.9 percent to $1.01 after declining as much as 15 percent earlier. The company said in a filing Sept. 2 that it reached an “understanding” with creditors to convert debt to equities. Suntech, once the world’s biggest solar-panel maker, defaulted on $541 million of bonds this year, opening the way for bondholders to sue in the U.S., where its shares and notes trade.

Increasing Confidence

Premier Li said in a speech in Nanning, China that the economy has “maintained stable development” since the first half and “confidence is increasing.”

An official Purchasing Managers’ Index for manufacturing rose to a 16-month high in August, while a similar index from HSBC Holdings Plc and Markit Economics showed the biggest gain in three years, according to data released earlier this week.

“Sentiment toward China has definitely picked up, particularly after the recent PMI numbers,” Tony Hann, the head of emerging-market equities at Blackfriars Asset Management Ltd., which manages $320 million in assets, said in an e-mail from London. “I think those that trade the market shorter term had gotten quite bearish in June and July and we are now seeing them reverse that positioning.”

The Hang Seng China Enterprises Index climbed 2 percent to a three-month high of 10,250.97. The Shanghai Composite Index rallied 1.2 percent to 2,123.112.

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