Chinese stocks traded in the U.S. rose as Suntech Power Holdings Inc. (STP) jumped after meeting its profit-margin target in the third quarter while Focus Media Holding Ltd. (FMCN) rebounded after denying a report that it had overstated the size of its advertising network.
The Bloomberg China-US 55 Index gained 0.4 percent to 97.11 at the close of trading in New York. Suntech, the world’s largest solar-panel maker, surged 17 percent after its gross margin matched the top end of its guidance. Focus Media jumped 15 percent to $17.70 after it said Muddy Waters LLC’s report was without merit. CNinsure Inc. (CISG) sank the most among stocks on the index after it said fourth-quarter sales growth will slow.
“China is a growth market and some smaller companies have extremely low valuations,” said Kevin Pollack, a fund manager at Paragon Capital LP which invests in U.S.-listed Chinese stocks.
U.S. stocks fell yesterday, driving the Standard & Poor’s 500 Index to its longest slump in almost four months, as slower- than-estimated economic growth overshadowed signs the Federal Reserve may provide more stimulus. The gauge slid 0.4 percent to a six-week low of 1,188.04.
The Chinese yuan was little changed at 6.3608 a dollar, according to the China Foreign Exchange Trade System. The currency has risen 3.9 percent this year. The ishares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., added 0.2 percent to $34.32.
China, the world’s second-largest economy, grew 9.1 percent in the third quarter from a year earlier. Consumer price gains slowed to 5.5 percent in October from a three-year high of 6.5 percent in July.
Muddy Waters
Focus Media, a digital advertising company based in Shanghai, issued a statement yesterday denying the allegations made by Muddy Waters, a short-selling firm owned by Carson Block. The company will recommend that the audit committee invite a third party to review the number of screens in its advertising network. Chairman Jason Jiang will buy $11 million of the company’s shares, it said in a separate statement.
American depositary receipts of Focus Media plunged as much as 66 percent on Nov. 21 after Muddy Waters recommended investors bet against the company, which it said overstated the number of television screens in its network and may have overpaid for takeovers to mask losses.
Suntech said third-quarter gross margin was 13 percent, compared with a previous guidance of 11 percent to 13 percent, even as excess capacity in China’s solar industry has driven down panel prices. The company’s expectation of a 10 percent gross margin for the fourth quarter was also in line with the mean estimate of 20 analysts surveyed by Bloomberg.
Suntech Jumps
Suntech’s ADRs leaped the most in more than three weeks to $2.62. The stock is trading at 1.9 times trailing 12-month profit, compared with 11.3 for the Bloomberg benchmark index.
Suntech will “reduce operating expenses by 20 percent and holding capacity expansion in 2012,” as it expects “excess capacity to fuel strong competition and consolidation in the next two to three quarters,” Chairman Zhengrong Shi said in a statement yesterday.
CNinsure tumbled 23 percent, the steepest decline on record, to $6.05, a six-week low.
Perfect World
Perfect World Co. (PWRD), an online game developer based in Beijing, dropped 14 percent to $9.73, the lowest level since March 2009, after it was reduced to “market perform” from “outperform” at Oppenheimer & Co. by equity analyst Andy Yeung.
The company said Nov. 21 third-quarter net income was 2.86 yuan per ADR, missing the 3.66 yuan average estimate of seven analysts surveyed by Bloomberg.
C. Ming Chun, an analyst at Susquehanna International Group LLC, yesterday cut a 12-month price target for the company to $18 from $22.
Yingli Green Energy Holding Co. (YGE), the Baoding, China-based solar company, may report an adjusted net loss of $6.1 million for the third quarter before U.S. trading starts today. That would compare with a net profit of $54.8 million in the previous three months.
The company on Nov. 7 cut its forecast for shipment of photovoltaic modules this year to as much as 1,630 megawatts, from its previous estimate of 1,750 megawatts. Yingli’s ADRs increased 7.6 percent to $3.54.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slipped 0.1 percent in its fifth day of losses to 2,412.63. The measure is trading at 11.4 times estimated earnings, compared with 14 for Indian stocks, 10 for Brazilian shares and 4.4 for Russian equities.
To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net