Stocks had a mixed week once again after gaining substantially
on the first two days of the week. Gains in shipping and tech
stocks helped markets negate a decline in property stocks on
Monday. The benchmark index rose to its highest level in eight
months on Tuesday after President Xi said reforms in state-owned
media enterprises would be undertaken.
Stocks took a breather on Wednesday ahead of HSBC Flash PMI
numbers, and the benchmark index declined. The manufacturing gauge
declined to its lowest level in three months on Thursday as stocks
took losses. JinkoSolar Holding Co., Ltd. (
) and SINA Corp. (
) beat second quarter earnings estimates. China Mobile Limited's (
) net income dropped during the first half of 2014.
Last Week's Developments
Stocks gained last Friday following speculation that the government
would take further measures to boost the economy. According to the
China Securities Journal, gains were led by technology and
financial companies. The Shanghai Composite Index increased 0.9% to
touch its highest level since Dec 10 last year. The CSI 300
increased 1.1% while the Hang Seng China Enterprises Index gained
The benchmark index gained 1.5% over the week, marking its fifth
consecutive week of gains. This is its longest series of weekly
gains after May 2013. Stocks gained over the week after inflation
declined last month. On the other hand, credit growth and
industrial production came in below expectations, giving rise to
speculations about monetary easing. A sub-index of tech stocks
within the CSI 300 increased 2.5% over the week, the highest among
the index's 10 industry groups.
Markets and the Economy This Week
The Shanghai Composite Index moved up 0.6% on Monday to close at
its highest level in eight months. Shipping and technology stocks
outweighed a decline in China's property sector. Government data
revealed that home prices dropped in 64 out of 70 cities during
July. Prices fell in the highest number of cities since the
government revised data compilation methods in Jan 2011.
The Hang Seng China Enterprises Index declined 0.4%. This was
primarily due to a 17% decline in FDI during July. The CSI 300
increased 0.6%. A technology sub-index of the CSI 300 increased
1.7%, the highest among the 10 industry groups.
Stocks gained once again on Tuesday following a statement from
President XI Jinping on reforms in state-controlled media
companies. The Chinese president said that the country will set up
media groups which are credible and will encourage integration
between traditional and new media. The statement led to a rally in
media stocks which fuelled larger market gains.
Analysts are of the view that President Xi's remarks have led
investors to believe that media reforms will be expedited.
The Shanghai Composite Index increased 0.3% to close at its highest
level since Dec 5. The CSI 300 closed nearly flat. Utility,
financial and healthcare stocks were the largest losers among the
index's 10 industry groups.
The ChiNext, a gauge of small cap stocks, moved up 0.5%. The
Hang Seng China Enterprises Index moved up 0.3% following
impressive earnings reports. The Bloomberg China-US Equity Index
gained less than 0.1%.
Property and energy stocks led losses as stocks declined on
Wednesday. The Shanghai Composite Index lost 0.2%, moving lower for
the first time in four days ahead of HSBC flash PMI numbers.
Analysts took the view that investors were taking a breather
following long period of gains.
The CSI 300 declined 0.4%. A sub-index of energy stocks lost
0.9%. This was the largest decline among the index's 10 industry
groups. The Hang Seng China Enterprises Index lost 0.4%. On the
other hand, the Hang Seng gained 0.2% following optimism
surrounding a stock-trading linkage with Shanghai. The Bloomberg
China-US Equity Index declined 0.3%.
The Shanghai Composite Index lost 0.4% on Thursday following a
decline in HSBC PMI numbers. The manufacturing gauge declined from
51.7 recorded in July to 50.3 in August. This is the index's lowest
level in three months and raises questions about the economic
The CSI 300 lost 0.5% and a sub-index of financial stocks moved
down 0.9%. This was the largest declined among the index's 10
industry groups. Meanwhile, a report in the China Securities
Journal quoted a government official who said state-owned companies
will move toward mixed ownership in the days ahead. The Hang Seng
China Enterprises Index declined 1%.
Stocks in the News
China Mobile Limited
, the world's largest mobile operator in terms of subscriber base,
announced results for the first six months of 2014 with adjusted
net income of RMB57.7 billion ($9.4 billion). Net income dropped
8.5% year over year owing to higher infrastructure cost and stiff
Total revenue climbed 7.1% year over year to RMB324.7 billion
($52.9 billion). Telecommunication service revenues, comprising
roughly 94% of total revenue, increased 4.7% year on year to
RMB297.9 billion ($48.5 billion). Steady revenue growth was
attributable to rapid growth of wireless data revenue, which was up
by a massive 51.8%.
JinkoSolar Holding Co.
, Ltd. reported second-quarter 2014 non-GAAP earnings per American
Depositary Share (ADS) of 80 cents (non-GAAP earnings of 20 cents
per share), beating the Zacks Consensus Estimate by 15.9%. In the
prior-year quarter, the company's adjusted earnings per ADS was 56
cents (non-GAAP earnings of 14 cents per share). The outperformance
was primarily driven by higher revenues and a rise in total solar
In the first quarter of 2014, the company's non-GAAP earnings per
ADS was 20 cents (non-GAAP earnings of 5 cents per share).
Despite posting favorable earnings, JinkoSolar shares edged down
1.6% to $27.38.
JinkoSolar provided third-quarter 2014 total solar module shipment
guidance in the range of 800-850 MW. For 2014, the company expects
total solar module shipments in the band of 2.9-3.2 gigawatts (GW).
reported second-quarter 2014 earnings of 7 cents per share, which
were much-better than the Zacks Consensus Estimate of a break even.
Earnings rebounded from a loss of 26 cents per share reported in
the year-ago quarter.
Revenues increased 20.7% year over year to $187 million and were
slightly higher than management's guided range of $177 million to
$182 million. Revenues are adjusted for deferred revenues of $4.1
million, mostly related to the license agreements resulting from
the E-House/CRIC transaction. Revenues were in line with the Zacks
SINA expects revenues for the third quarter of 2014 in the range of
$193 million to $199 million. Management believes that increasing
investment by Weibo on product development and marketing will hurt
its and also SINA's operating results in 2014. SINA also expects to
invest in its own portal (mobile and video). This will also keep
margins under pressure.
JA Solar Holdings Co. Ltd.
) announced earnings of 14 cents per ADS in the second quarter of
2014, missing the Zacks Consensus Estimate by 17.6%. Earnings also
dropped 56.3% from 32 cents per ADS a year ago and 75.9% from 58
cents per ADS in the preceding quarter.
Higher operating expenses led to lower-than-expected profits with
the stock price tumbling 6.31% in yesterday's trading session to
close at $9.36.
JA Solar reported revenues of $390.5 million, beating the Zacks
Consensus Estimate of $385.0 million. Revenues also increased 52.9%
year over year and 6.5% sequentially.
JA Solar expects to ship 730-760 MW of cells and modules in total
for the third quarter. For 2014, the company lifted its full year
cell and module shipment guidance to 2.9-3.9 GW from its earlier
expectation of 2.7-2.9 GW. The revised outlook includes 200 MW of
module shipments to the company's downstream projects.
E-House (China) Holdings Limited
) reported second-quarter 2014 earnings of 9 cents per diluted ADS,
significantly higher than 5 cents per ADS in the year-ago quarter.
Earnings excluding share-based compensation expense and
amortization of intangible assets increased from 11 cents per ADS
in the year-ago quarter to 14 cents per ADS in the second quarter.
The jump in profits can be attributed to a significant increase in
revenues and a decline in charges. Revenues increased 29% from
$163.4 million in the year-ago quarter to $210.1 million. Real
estate online service revenues increased 63% to $117.3 million on a
year-over-year basis. The major factor behind this surge was a 159%
increase in e-commerce services, which came in at $68.3 million.
The company maintained its revenue outlook for fiscal year 2014
within $910- 930 million. This is a projected increase of 24-27%
from the $731.1 million recorded in 2013.
Performance of Most Actively Traded US-listed Chinese
The table given below shows the price movements of 10 Chinese
companies with the highest three-month average trading volume on
U.S. exchanges. Price movements over the last five days and during
the last six months have been included.
Last 5 Day's Performance
Next Week's Outlook:
Stocks have had a mixed run this week after an unexpected
decline in HSBC PMI numbers. Coming on the back of disappointing
industrial production and credit growth data, dismal manufacturing
data raises concerns about the economic recovery. Meanwhile,
speculation has gathered strength that monetary easing will be used
to achieve the year's growth target.
Next week is bereft of economic reports that can have any
significant impact on market movements. However, the government
continues to make announcements regarding structural reforms. This
week was witness to a statement on reforms of state-controlled
media enterprises, which helped markets chalk up gains. Any further
indications of a similar nature would help stocks return to their
winning ways in the days ahead.
Want the latest recommendations from Zacks Investment Research?
Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
JA SOLAR HOLDGS (JASO): Free Stock Analysis
SINA CORP (SINA): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis
JINKOSOLAR HLDG (JKS): Free Stock Analysis
E-HOUSE CHINA (EJ): Free Stock Analysis Report
To read this article on Zacks.com click here.