ETF Swings Rise Amid U.S. Debt Talks: China Overnight

Expectations for price swings on China’s biggest exchange-traded fund in New York rose for the first time in four days as U.S. lawmakers sought a budget deal before the country loses its borrowing authority in two days.

The Chicago Board Options Exchange China ETF Volatility Index, which measures traders’ predictions of price fluctuations in the iShares China Large-Cap ETF, rose 1 percent to 24.88, after declining the three previous days. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. slipped less than 0.1 percent to 104.65 yesterday after tumbling as much as 1.2 percent earlier.

The Standard & Poor’s 500 Index jumped 0.4 percent, reversing earlier declines of up to 0.7 percent, after U.S. Senate Democratic and Republican leaders said they are optimistic about ending a partial government shutdown and preventing the nation from breaching the debt ceiling before the Oct. 17 deadline. Chinese exports unexpectedly fell 0.3 percent last month from a year earlier, government data on the weekend showed, while the central bank reported new yuan loans that topped estimates yesterday.

“If politicians continue moving one step forward, two steps backward and then forward again, then we should expect more volatility,” Elena Ogram, a Zurich-based investor at Bank Bellevue AG, who oversees $50 million in emerging-market assets including Chinese stocks, wrote by e-mail yesterday. “I still think that a normalization in China is on track, but will wait for more data.”

The iShares China ETF added 0.4 percent to $38.50 in New York in a fourth day of gains.

Hollysys Jumps

China Lodging Group Ltd., owner of a budget-hotel chain, jumped 12 percent to $22.93, the highest level since January 2011.

Hollysys, a Beijing-based maker of automation systems, surged 9.7 percent to $17.54, the highest level since its U.S. listing in August 2005. The company won two contracts with a combined value of $51.5 million to provide equipment to high-speed trains, it said in a statement yesterday. Delivery of the products will be completed by early 2014.

WuXi PharmaTech Cayman Inc., a biotechnology company, tumbled 5.6 percent to $27.56, falling the most since June. Trading volume was 1.7 times the three-month average, data compiled by Bloomberg showed. The stock rose to the highest level since January 2008 on Oct. 11. The company is scheduled to report third-quarter earnings on Nov. 12.

Vipshop Holdings Ltd., a Guangzhou-based web clothing retailer, slipped 2.9 percent to $67.9, after a three-day rally sent it to a record $69.92 on Oct. 11.

New Loans

The central bank said yesterday September new yuan loans rose to 787 billion yuan ($128.8 billion), topping the 675 billion yuan median estimate of 41 analysts compiled by Bloomberg and compared with 623.2 billion yuan a year earlier. Money-supply expansion slowed to 14.2 percent and the broadest measure of credit fell from a year earlier to 1.4 trillion yuan.

The world’s second-largest economy may have grown 7.8 percent in the third quarter, according to the median projection of economists compiled by Bloomberg before the figure is due Oct. 18.

The Shanghai Composite Index gained 0.4 percent to 2,237.77, the highest level in a month. Hong Kong markets were closed yesterday for a holiday.

Before it's here, it's on the Bloomberg Terminal.