CHINESE equities listed in the U.S. posted the first weekly gain in three, led by telecom and Internet companies, on speculation slower growth in China may prompt the government to add more cash to the economy.
The Bloomberg China-US 55 Index of the most-traded Chinese stocks rose 1.7 percent last week to 95.80. China Mobile Ltd. (CHL) (0941. HK) and China Unicom (Hong Kong) Ltd. (600050. SH) drove up the benchmark after adding the most 3G subscribers on record last month. Baidu Inc., owner of the country’s biggest online-search engine, and Sina Corp. paced advances among Internet shares for the week. China Petroleum and Chemical Corp. (SNP) (600028. SH) and Yanzhou Coal Mining Co. (YZC)(600188. SH) also ended the week stronger after buying resources overseas.
Premier Wen Jiabao pledged last week to provide support to small companies and the export sector as Europe’s debt crisis lingers. The government cut the amount of cash lenders must set aside as reserves this month as the economy grew at the slowest pace since 2008.
“With the slowdown in the economy next year, the Chinese authorities are likely to reduce the reserve requirement ratio,” said Kelvin Tay, the Singapore-based chief investment strategist at UBS AG Wealth Management in an interview with Bloomberg Television Dec. 23. “With an improving liquidity outlook, the Chinese stock market should gradually improve.”
China Mobile, the country’s largest wireless carrier, added a net 2.68 million 3G users in November, the biggest monthly gain on record. That compared with a record 3.38 million at China Unicom (CHU), the second-largest and the only carrier offering Apple Inc.’s iPhone with a service contract in China. China Telecom, the smallest of the three, gained a net 2.16 million 3G users for the month.
Telecom Stocks
China Unicom is likely to meet its full-year target of adding 25 million 3G subscribers, analysts led by Anand Ramachandran at Barclays Capital Inc. said in a report Dec. 20. Jefferies Hong Kong Ltd. and DBS Vickers Hong Kong Ltd. maintained a “buy” rating on the company.
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose 2.3 percent last week to $35.31. The Chinese yuan strengthened 0.2 percent during the period to 6.3364 a dollar, according to the China Foreign Exchange Trade System.
China Petrochemical Corp., a unit of China Petroleum known as Sinopec, completed the purchase of Canada’s Daylight Energy Ltd. for about C$2.2 billion ($2.16 billion), the company said in an e-mailed statement Dec. 23. The purchase gives the Beijing-based company access to more than 300,000 acres of land in areas rich with oil and natural gas, after falling crude prices made valuations attractive.
Sinopec, Yanzhou Coal
Sinopec’s American depositary receipts climbed 4.8 percent in the past week to a 10-month high of $106.79.
Yanzhou’s ADRs gained 3 percent last week to $21.47, following a three-day trading suspension ahead of the deal to buy Australia’s Gloucester Coal Ltd.
The transaction values Sydney-based Gloucester at as much as A$10.16 a share, subject to conditions, according to a statement from the Australian company. The acquisition will almost double Yanzhou’s coal mines in Australia, the world’s biggest exporter, as well as expand its access to ports.
The Standard & Poor’s 500 Index advanced 3.7 percent last week to 1,265.33. The Shanghai Composite Index sank for the seventh week, declining 0.9 percent to 2,204.78.
The Shanghai measure is trading at an estimated price- earnings ratio (SHCOMP) of 10.6 times. That compared with 13.7 for Indian stocks, 10.2 for Brazilian shares and 4.6 for Russian equities.
China, the world’s second-largest economy, expanded 9.1 percent in the third quarter from a year earlier, down from 9.5 percent in the second. Consumer prices rose 4.2 percent in November from a year ago, the slowest pace in 14 months.