Chinese ADRs Head for Fourth Quarterly Gain on Stimulus Outlook

Chinese stocks traded in the U.S. are poised for a fourth straight quarterly gain amid speculation that the government will take further steps to boost the slumping economy.

The Bloomberg China-US Index jumped 1 percent to 115.76 on March 27, pushing its quarterly gain to 6 percent. The biggest U.S. exchange-traded fund tracking the country’s stocks has risen 3.6 percent in the first three months of this year. JinkoSolar Holding Co. led a rally among renewable energy stocks as the government raised its solar installation target.

The rally in the U.S.-traded stocks compared with a 14 percent gain this year in the Shanghai Composite Index as investors looked past the slowest economic expansion in 24 years in anticipation of further government support. Policy makers will take action if growth slips below a target of 7 percent, Premier Li Keqiang said this month. The central bank has cut interest rates twice since November and reduced banks’ reserve ratios in February.

“There’ll be more stimulus and more targeted measures to support the economy,” Brendan Ahern, Chief Investment Officer of Krane Fund Advisors LLC in New York, said by phone on March

27. “The overseas-traded stocks should play catch-up with their onshore peers amid a policy tailwind. As foreign investors learn about China’s reforms and what’s going on there, it’ll be a good thing for U.S.-listed Chinese companies.”

Solar Stocks

Chinese solar producers led an 18 percent quarterly rally in the Global Large Solar Energy Index. China’s National Energy Administration this month outlined a goal to install as much as

17.8 gigawatts of solar capacity for 2015, 19 percent higher than the agency’s previous target.

JinkoSolar Holding Co. gained 34 percent this quarter to $26.39. The stock also was boosted by the company’s plan to build a factory in Malaysia, which it said on March 19 will boost its capacity by 14 percent. The plant also will allow it to avoid import duties in Europe and North America.

Trina Solar Ltd., the largest solar-panel maker globally, rallied 31 percent to $12.11, its first gain in six quarters. The manufacturer shipped about 3.66 gigawatts of panels last year, 42 percent more than in 2013. The company expects global demand for panels to rise about 15 percent this year and that its shipments will grow even more quickly, Chairman Jifan Gao said in a conference call March 4.

The iShares China Large-Cap ETF climbed to $43.10. The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, the largest U.S. exchange-traded fund that tracks mainland Chinese stocks, rallied 10 percent to $40.98 in the quarter.

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