SouFun Tops ADR Plunge on New Property Measures: China Overnight
Chinese equities fell in New York for the first time in a week, led by property companies, on concern government steps to intensify a three-year effort to tame the real estate market will damp an economic rebound.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. sank 1.3 percent to 92.86 yesterday after a four-day rally. SouFun Holdings Ltd. (SFUN), the nation’s biggest real estate information website, tumbled the most in a year, and E-House China Holdings Ltd. (EJ) dropped to a two-month low. Suntech Power Holdings Co. slid after appointing a new chairwoman while Security software company NQ Mobile Inc. (NQ) jumped 17 percent on a partnership with America Movil SAB.
The China-US gauge’s retreat followed the Shanghai Stock Exchange Property Index’s biggest decline since June 2008 as the Cabinet ordered more measures to cool real estate prices and after growth in the nation’s services industries slowed. China’s legislature will start its annual meeting today to set economic goals and elect new government leaders after the world’s second- largest economy emerged from its seven-quarter slowdown in the last three months of 2012.
“The property market is key to sentiment, so it’s important for the government not to create the idea among the public that they’re cracking down on property,” Christopher Palmer, who oversees about $2.5 billion as the London-based director of global emerging markets at Henderson Global Investors Ltd., said by phone yesterday. “If the market becomes unstable or property developers’ access to loans is cut off, they could have negative impact on the economy.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., sank 1.7 percent to $37.93, the lowest price since Dec. 4. The Standard & Poor’s 500 Index (SPX) climbed 0.5 percent to 1,525.20.
SouFun’s American depositary receipts tumbled 8.3 percent to $23.51, the biggest slump since February 2012. E-House slipped 2.9 percent to $4.3, the lowest level since Jan. 2.
Details on the property measures are “slightly stronger than expected and sooner than expected,” Matthew Sutherland, Senior Investment Director for Equities at Fidelity Worldwide Investment, said in an e-mailed statement yesterday. “We are at the start of a tightening cycle which will make it hard for the property sector to outperform.”
Suntech, the world’s biggest solar-panel maker, slumped 3 percent to $1.27, after losing 10 percent last week.
The company, based in Wuxi of Jiangsu province, said yesterday Susan Wang, a director at Suntech since April 2009, was appointed chairwoman of the board, replacing Zhengrong Shi. Shi, who was chief executive officer until August, will remain as a director.
Youku Tudou Inc. (YOKU), formed from a merger of China’s biggest video websites in August, plunged 5.1 percent to $19.02, the lowest level this year.
It’ll take a year before the business shows actual synergy from the merger, and the effect will be more noticeable in the second half, Youku’s Chief Executive Officer Victor Koo said March 1 in an interview, according to a report on imeigu.com, which provides news of U.S.-traded companies.
NQ Mobile Inc., a Beijing-based mobile security software developer, had the biggest jump on record to $8.07. Trading volume was six times the daily average over the past three months. The ADRs led gains on the Bloomberg China-US gauge.
America Movil, the world’s third-largest mobile network operator, will offer three of NQ’s mobile security applications to the carrier’s 262 million subscribers in 18 countries, NQ said in a statement yesterday. The services will start from Mexico through its Telcel unit with about 68 million subscribers, NQ said.
The deal with America Movil, which is controlled by billionaire Carlos Slim, is “much more significant to NQ in terms of size” than its previous partnership with other operators, Andy Yeung, an analyst at Oppenheimer & Co. in New York who rates NQ the equivalent of buy, said by phone yesterday. “It also opens a new revenue source for NQ, whose sales mainly came from application downloads and from phone manufacturers previously.”
The Hang Seng China Enterprises Index (HSCEI) lost 2.1 percent to 11,104.65 yesterday, the largest slump in a week, while the Shanghai Composite Index of domestic Chinese shares tumbled 3.7 percent to 2,273.40, sinking the most since August 2011.
Twelve-month non-deliverable forwards on the yuan weakened 0.1 percent to 6.3275 per dollar, the biggest retreat in two weeks. The currency was little changed at 6.2251 per dollar in Shanghai yesterday, according to the China Foreign Exchange Trade system.
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