Xunlei Posts Record Gain as Policy Outlook Spurs China ADR RallyBelinda Cao
Chinese companies trading in the U.S. ended a two-week decline as Xunlei Ltd. rose the most since its debut, and the central bank’s third interest-rate cut in six months bolstered speculation that policy makers will take further actions to stimulate growth.
The Bloomberg index of the most-traded Chinese stocks in the U.S. rose 1.3 percent last week, extending its rally this year to 20 percent. Xunlei, a Shenzhen-based digital content download service, surged 35 percent in the five trading days, the steepest weekly advance since it began trading in June. Mobile security company Cheetah Mobile Inc. rose to a record.
Stocks climbed as Ctrip.com International Ltd. to NetEase Inc. reported better-than-estimated earnings and policy makers cut interest rates for the third time since November in a string of monetary easing measures designed to spur growth. Government data last week showed that April industrial output, retail sales and credit growth trailed economists’ projections, stoking speculation the government may take additional steps to revive the economy.
“There’s positive sentiment across all Chinese equities, and the Internet sector has done particularly well because of earnings,” Gabriel Wallach, founder of North Grove Capital LLC in Boston which invests in Chinese stocks, said by phone Friday. “You have policies that are positive for stocks. The rate cut will help companies to lower their debt levels, and it’s likely there’ll be a lot more easing.”
More than two-thirds of the 35 companies on the Bloomberg China-U.S. gauge that have reported earnings this season have beaten analyst sales projections while about half have topped profit estimates.
Xunlei’s American depositary receipts added 6.6 percent on Friday to $10.54, the highest price in six months. Their record weekly gain came as peer Beijing Baofeng Technology Co. surged 31 fold from its initial offering price on China’s Shenzhen Exchange seven weeks ago.
Cheetah Mobile, based in Beijing, soared 35 percent last week to $30.53. The company is scheduled to report first-quarter earnings on May 19.
Ctrip, China’s biggest online travel-booking website, gained 13 percent for the week to $71.97, the highest since its U.S. debut in 2003. NetEase, an online games company, rallied 9.2 percent to $141.12, also a record.
The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, the largest U.S.-traded exchange-traded fund tracking mainland companies, added 1.3 percent to $47.72 as it attracted investor inflows for a third week.