Chinese A-Share ETF Falls Most in Month in New York; ADRs Drop

  • Bloomberg China ADR gauge retreat led by technology companies
  • Baidu falls after announcing general recruitment suspension

The largest U.S. exchange-traded fund tracking A shares fell the most in a month and Internet companies led losses among Chinese companies listed in New York on speculation a recent rally was excessive.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF dropped 4.6 percent to $34.61 on Wednesday, retreating after a three-week rally of as much as 19 percent. The Bloomberg China-U.S. Equity Index declined for a second day, losing 2 percent. American depositary receipts of Alibaba Group Holding Ltd. contributed the most to the loss on the index, slipping 3.2 percent. Baidu Inc., China’s biggest search engine, slid 2.3 percent after it said has suspended recruitment for general positions.

Investors are weighing the severity of China’s economic slowdown after a report on Monday showed better-than-estimated expansion in gross domestic product in the third-quarter, while reports for investment and industrial output missed forecasts this week. Policy makers are expected to lower their growth targets when they present the first five-year plan under President Xi Jinping next week.

Worried Investors

“Investors are very worried about the Chinese economy as reflected in the pressure on materials and commodity companies,” Gabriel Wallach, founder of North Grove Capital LLC in Boston, said in a phone interview. “But on the other hand, investors have come to understand that the weak economy doesn’t necessarily affect companies on the retail and service side. The drivers are a little bit different.”

Baidu, scheduled to report its third quarter earnings on Oct. 29, fell to $149.63. The company, which has missed its own sales guidance in the past four quarters, said on Wednesday that it has suspended recruitment for general positions such as administration, back office and sales, while hiring from university campuses and for targeted technical positions will continue.

“The company has been spending aggressively in new businesses, which are not profitable,” Wallach said. “If they are announcing a hiring freeze maybe it’s related to expectations to slower growth.”

Alibaba fell the most since Sept. 8, closing at $69.48. ChinaCache International Holdings Ltd. dropped 5 percent to $7.37 for the second-biggest retreat on the Bloomberg China gauge. Noah Holdings Ltd., which distributes wealth management products in China, fell the most, slumping 5.9 percent to $26.06.

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