Solar Surge Drives Rally to 5-Week High: China Overnight
Solar stocks soared in New York, driving the benchmark index of Chinese U.S.-traded shares to a five-week high, as the government offered a second round of subsidies for more than 100 new energy projects.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. climbed 0.4 percent to 95.26 yesterday, rising for a sixth day in the longest stretch of gains since October. LDK Solar Co., the world’s second-largest maker of solar wafers, and panel maker Yingli Green Energy Holding Co. (YGE) both surged at least 15 percent. Sina Corp. (SINA) extended the previous day’s gains after BOCOM International Securities Ltd. said its partnership with AutoNavi Holdings Ltd. is beneficial.
China’s Science and Technology Ministry confirmed a second round of subsidies to more than 100 developers of solar projects with total capacity of 2.8 gigawatts yesterday, as the government seeks to bolster an industry dogged by overcapacity and depressed global prices. LDK Solar, which has more than $3.1 billion of debt, is the biggest decliner on the China-US gauge in 2012, slumping 71 percent. Yingli, Trina Solar Co. (TSL) and Suntech Power Holdings Co. are also among the bottom 10.
The subsidies are a way to spur “orderly consolidation” of China’s solar industry, Mahesh Sanganeria, a technology analyst at RBC Capital Markets in San Francisco who rates Trina and Yingli the equivalent of hold, said by phone yesterday. “You beef up some people and let others die. That way you make the industry viable eventually.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., added 0.5 percent to a nine-month high of $39. The Standard & Poor’s 500 Index was little changed at 1,428.48 after Federal Reserve Chairman Ben S. Bernanke said the central bank can’t offset the full effect of the fiscal cliff, damping optimism about the Fed’s plan to expand its stimulus by buying more Treasuries.
Trina Solar Co., China’s third-largest maker of solar panels, surged 10 percent to $3.76, the highest level in a month for the Guangzhou-based company. Yingli, based in Baoding in China’s Hebei province, jumped 18 percent to $2.14, the biggest rally since Feb. 9. Both Trina and Yingli are among the manufacturers chosen to receive aid.
Jiangsu, China-based Suntech, the world’s largest solar-panel maker, climbed 11 percent to 99.5 cents, the highest close since Nov. 2.
The company’s unit Suntech Power Japan Corp. will become one of the suppliers for a project of Softbank Corp. (9984), Japan’s third-largest mobile-phone carrier. Softbank plans to install solar panels on rooftops of 1,000 homes across Japan to take advantage of the country’s incentive program for clean energy, according to the company’s statement yesterday.
LDK, the world’s second-largest maker of wafers, jumped 15 percent to $1.2, the strongest level since Sept. 27. The company, based in Xinyu of Jiangxi province in China, hired Citigroup Inc. to help renegotiate its liabilities, according to its statement yesterday.
LDK, which cut this month its full-year forecast for sales and shipments on waning demand, may be seeking access to government support, Edwin Mok, an analyst at Needham & Co. in San Francisco, said yesterday in an interview.
“In China, there’s some opportunity for these challenged solar companies to find ways to get financing or liquidity, and Citi will help them figure out the best way to do that,” Mok said. “The company has a very challenging balance sheet.”
Shanda Games Ltd. (GAME), China’s third-biggest online games operator, advanced 4.9 percent, leading a rally in Internet companies on the Bloomberg China-US gauge. Shanghai-based Shanda rose to $2.98, the steepest gain since Nov. 6.
Sina, which owns the Twitter-like Weibo service in China, climbed 3.9 percent to a one-week high of $44.86.
Shanghai-based Sina said it teamed up with AutoNavi Holdings Ltd., a digital map content provider, to share their services on Weibo, according to their joint statement Dec. 11.
The partnership will “enlarge the user base” and increase the users’ reliance on both sets of applications, BOCOM analysts led by Ma Yuan wrote in a report yesterday.
Sohu.com Inc. (SOHU), operator of China’s fifth-most-visited website, climbed 3 percent to a one-month high of $40.45.
Sohu’s video unit won exclusive online rights for a Chinese version of television show The Voice, the company said on its Weibo account on Dec. 11. Sohu spent more than 100 million yuan on the rights of the show, the Beijing Morning Post said in a report yesterday.
SouFun Holdings Ltd. (SFUN), owner of China’s biggest real-estate information website, retreated 1.2 percent to $22.91, dropping the most among 14 companies that fell on the Bloomberg China-US gauge.
The Hang Seng China Enterprises Index (HSCEI) climbed 1.5 percent to 11,161.56 yesterday, the highest level since March 16, while the Shanghai Composite Index (SHCOMP) of domestic shares added 0.4 percent to 2,082.73. The Shanghai gauge jumped 4.1 percent last week, the most since October 2011, after sinking to an almost four-year low on Dec. 3.
The number of funded stock accounts dropped by about 49,000 to 55.55 million in the week to Dec. 7, the lowest level since the week to Nov. 26, 2010, regulatory data compiled by Bloomberg showed yesterday.
Thirty-day volatility in the Bloomberg China-US gauge was little changed at 19.17 yesterday, compared with this year’s average of 22.38. The Bloomberg Chinese Reverse Mergers Index, which tracks a basket of companies that gained U.S. listings after buying firms that already trade, climbed 0.5 percent to a six-day high of 74.41.
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