Economic Stimulus Wagers Drive Best Week Since February

Chinese stocks trading in New York had the best week since February as state-owned companies from China Mobile Ltd. to PetroChina Co. rallied on speculation the government will stimulate the economy.

The Bloomberg index of the most-traded Chinese shares in the U.S. climbed 2 percent to 100.14, paring this year’s decline to 5.6 percent. China Mobile, the world’s largest phone company, jumped the most in a month. PetroChina, the country’s biggest oil and gas producer, rose 1.9 percent.

China’s manufacturing grew less than economists estimated in April, according to a May 1 report, underscoring weakness in the world’s second-biggest economy and spurring speculation the government will act to bolster gross domestic product.

“The expectations of stimulus helped,” Michael Wang, an emerging-market strategist at Amiya Capital LLP, said in a phone interview from London. “Some of the stocks tied to the old economy start to outperform the new economy.”

Premier Li Keqiang is trying to avoid a deeper slowdown after property construction plunged in the first quarter and growth cooled. Chinese economic output is projected to expand 7.3 percent this year, the weakest pace since 1990, as the government reins in credit.

China’s State Council last week pledged extra efforts to support trade, including through financing and export rebates, with Li saying that the situation was “severe and complicated.”

Government Crackdown

China Mobile, based in Beijing, rallied 5.2 percent to $47.09. China Telecom Corp., the nation’s third-biggest mobile-phone carrier, surged 12 percent to $51.07. PetroChina advanced to $115.30.

State-run companies also gained as investors sought safety amid a crackdown on online pornography.

The government closed 110 websites and deleted about 3,300 accounts on social networking services, including Tencent Holdings Ltd.’s WeChat and Sina Weibo, Xinhua News Agency reported April 21. Inc. sank to a one-year low on April 28 after China ordered the Internet company to remove the U.S. television show “The Big Bang Theory” from its website.

Sina Corp., owner of a Twitter-like service, said after the close of regular trading in New York on May 2 that licenses for Internet publication and online transmission of audio-visual program would be revoked. The suspension was “due to certain unhealthy and indecent content from third parties or by users” via its online reading channel, according to the company. The company also received a fine.

Melco Crown Entertainment Ltd., the casino venture controlled by billionaires James Packer and Lawrence Ho, climbed 2.5 percent to $36.45 for the week as data showed revenue at Macau operators beat estimates.

Mass market

Gaming revenue from the six casino operators in the world’s biggest gambling hub rose 11 percent to 31.3 billion patacas ($3.92 billion) in April, Macau’s Gaming Inspection and Coordination Bureau said May 2. The increase compares with the 7 percent median estimate of five analysts surveyed by Bloomberg News. Separately, Wynn Macau Ltd. reported first-quarter profit that beat analyst estimates as billionaire Steve Wynn’s casino drew more premium mass-market customers.

“The way the market looks at casino companies is that they are a consumer play on China,” Gustavo Galindo, who helps oversee $10 billion of emerging-market assets at Russell Investments, said in a phone interview from New York. “Some managers find them worth owning.”

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., added 0.9 percent to $35 last week. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong rose less than 0.1 percent to 9,802.46, snapping a two-week slide.

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