Jan. 16 (Bloomberg) -- Chinese stocks in the U.S. rose for a fourth week, the longest winning streak in a year, on prospects China will take further steps to spur growth as the threat of a global slowdown erodes the outlook for Asia’s fastest growing economy.
The Bloomberg China-US 55 Index rose 1 percent last week to 99.61 on Jan. 13 in New York, led by solar and Internet companies. Trina Solar Ltd. jumped 41 percent in the week as China said it will double solar capacity in 2012. Sina Corp. surged 24 percent after at least eight analysts recommended buying the stock. China Southern Airlines Co. traded at a discount to its shares in Hong Kong for the first time this year after the biggest slump in two months on Jan. 13.
China’s economy probably slowed in the last quarter of 2011, according to the median forecast of economists surveyed by Bloomberg before data this week. Policy makers cut banks’ reserve-requirement ratios last month for the first time since 2008 and have kept key interest rates on hold since July.
Economic data in China “has actually pushed the market by expecting further monetary easing in the form of cutting reserve requirement ratios,” Norman Chan, head of investment at Calibre Asset Management Ltd. in Hong Kong, said in a Jan. 13 interview with Bloomberg Television. “On the valuation, China’s market has suffered a bad year already. On a cyclical basis, there is a good chance for them to rebound.”
European Downgrades
The Bloomberg China-US 55 index of the most-traded Chinese stocks in the U.S. dropped 0.7 percent on Jan. 13 after Standard & Poor’s cut France’s AAA rating by one step, threatening European policy makers efforts to recover from the region’s debt crisis.
The ratings company also lowered the rankings of Cyprus, Italy, Portugal, and Spain by two notches and cut Austria, Malta, Slovakia, and Slovenia by one level.
The Shanghai Composite Index declined 1.3 percent, the most in a week, to 2,244.58 on Jan. 13, after climbing 3.8 percent last week. The Standard & Poor’s 500 Index of U.S. stocks slid 0.5 percent to 1,282.74 on Jan. 13 for a gain of 0.9 percent during the week.
The Shanghai index is trading at an estimated price to earnings ratio of 9.2. That compares with a ratio of 14 for Indian stocks, 9.3 for Brazilian shares and 5.4 for Russian equities, the cheapest among the biggest emerging markets.
Changzhou, China-based Trina Solar leaped 41 percent last week, the most since March 2009, to $9.57. The company surged 29 percent on Jan. 11 following reports that China plans to develop three gigawatts of solar capacity this year while Germany installed three gigawatts of solar panels in December, the most in a single month. Suntech Power Holdings Co., China’s biggest solar-panel maker, jumped 29 percent last week to $2.96.
Rally ‘Overdone’
The U.K. also saw installations surge in the final part of 2011 as the price of panels tumbled. Installations for the year rose to 762 megawatts, 10 times the previous year’s total, according to figures from the Ofgem energy regulator.
Gordon Johnson, the Axiom Capital Management Inc. analyst who predicted “Armageddon” for the solar industry 14 months ago, raised his recommendations for Trina, Suntech Power and Yingli Green Energy Holdings Co. on Jan. 11.
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 4.5 percent last week to $36.74, the most in six weeks. The yuan was little changed in the five days to Jan. 13 at 6.3066 per dollar, according to the China Foreign Exchange Trade System.
The solar rally “feels overdone” as overcapacity remains a major problem, Pavel Molchanov, an analyst at Raymond James & Associates Inc. wrote in a Jan. 13 research note.
Sina Upgrades
Sina, the Twitter-like service provider and owner of the third-most visited website in China, climbed 24 percent to $59.92 last week, the biggest weekly increase in three months.
Dick Wei, an analyst at JPMorgan Securities Ltd., raised the stock to “overweight” from “neutral,” and set a 12-month price target of $79. At least seven other analysts also reiterated their recommendations to buy the stock last week, according to data compiled by Bloomberg.
The company was the top pick among Chinese Internet firms in 2012, C. Ming Zhao, a communications analyst at Susquehanna International Group LLP, wrote in a Jan. 13 note.
American depositary receipts of China Southern, Asia’s biggest air carrier by passenger numbers, tumbled 6.7 percent on Jan. 13 to $27.74, the biggest drop since Oct. 31. The ADRs, each representing 50 common shares, traded 0.3 percent lower than the company’s Hong Kong-listed stock, the first day they’ve offered a discount this year.
Slowing Growth
Passenger traffic for China Southern rose 5.3 percent in 2011 to 80.5 million, the Xinhua News Agency reported on Jan. 1, citing an unidentified company spokesman. That was less than the 15.4 percent growth in 2010.
China Southern “still stands a better chance to lead its peers in 2012 performance” even if the industry’s growth slows, Bocom International Holdings said in a report on Jan. 13.
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 quarter. Growth probably slowed to 8.7 percent in the last three months of 2011, according to the median forecast of 27 economists in a Bloomberg survey. The government is scheduled to report gross domestic product figures on Jan. 17.
Source:businessweek