Baidu Rebounds on Reading Site Acquisition as Ctrip Rises

Chinese equities advanced in New York, extending a weekly gain, as Baidu Inc. jumped on prospects the purchase of a literature website will help expand its consumer business.

The Bloomberg China-US Equity Index of the most traded Chinese stocks in the U.S. rose 1.3 percent to 105.77 yesterday for a weekly gain of 1.9 percent, the most in six weeks. Baidu, China’s biggest web search engine, climbed the most in two weeks after agreeing to buy a reading website from online game operator Perfect World Co. International Ltd. and Sina Corp. surged to the highest since Nov. 15.

Beijing-based Perfect World agreed to sell its Chinese online reading business to a unit of Baidu for 191.5 million yuan ($31.6 million), according to a statement it issued yesterday. Baidu has spent at least $2.5 billion on six acquisitions this year as it competes with Hangzhou, China-based Alibaba Group Holding Ltd. and Hong Kong-based Tencent Holdings Ltd. to maintain market share among Chinese Internet companies.

“Everybody gets what they need: Perfect World needs to consolidate its media assets, Baidu wants to expand further in consumer business,” Nick Ning, a Shanghai-based analyst at 86Research Ltd., said by e-mail yesterday. “With the online reading assets Baidu has acquired, it can do their own literature business, which makes money mainly from selling paid contents to readers.”

ETF Climbs

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., advanced 1.5 percent to $38.20 in New York. It gained 2.4 percent for the week, the biggest advance in five weeks. The Standard & Poor’s 500 Index was little changed, rising 1.3 percent this week.

Baidu’s American depositary receipts jumped 3.9 percent to $173.77, the highest since Dec. 10, taking its rally this year to 73 percent.

Its unit Beijing Baidu Netcom Science Technology Co. will buy Huanxiang Zongheng Chinese Literature Website Co. from Perfect World, according to the statement. The agreed purchase amount included loan repayment to Perfect World.

Baidu, China’s second-largest Internet company by market value after Tencent, paid $1.85 billion for Internet application store 91 wireless in July and bought a stake in group-deal site for $160 million in August. It also acquired video business PPStream Inc. this year for $370 million.

Perfect World’s ADRs gained 1.5 percent to $17.83 in New York, rallying the most in two weeks.

Travel Apps

Ctrip, China’s biggest travel booking website, soared 4.4 percent to $52.55. Its 8 percent gain this week is the biggest in three months.

Ctrip’s applications for iPhones in China ranked first in terms of downloads among all online travel agencies in the first 23 days this month, T.H. Capital LLC, which compiles research on U.S.-traded Chinese companies, said in a note yesterday. Total downloads of Ctrip’s apps on Android devices rose 16.3 percent since Nov. 19, outpacing its competitors Qunar Cayman Islands Ltd. and Elong Inc., according to the report.

Qunar’s ADRs sank 3.7 percent to a three-week low of $26.34 in New York, while Elong’s ADRs added 2.6 percent to $19.96.

Sina, which owns China’s Twitter-like Weibo service, jumped

4.3 percent to $82.64. Its shares have rallied 65 percent this year.

The Shanghai Composite Index soared 1.4 percent to 2,101.25, the largest gain since Nov. 18. The gauge was up 0.8 percent for the week. The Hang Seng China Enterprises Index in Hong Kong rallied 1.9 percent this week to 10,830.10, halting a four-week slump.

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