For Immediate Release
Chicago, IL - July 31, 2015 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Baidu, Inc. ( BIDU ), Sohu.com Inc. ( SOHU ), PetroChina ( PTR ) and Alibaba ( BABA ).
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Here are highlights from Thursday's Analyst Blog:
ChinaStock Roundup: Grievous Losses
Markets suffered grievous losses this week as the effect of government support measures seemed to weaken. The Shanghai Composite Index tanked on Monday, experiencing its worst one-day slide since Feb 2007. Stocks declined again on Tuesday during a session which witnessed further volatile trading.
The Shanghai Composite rebounded on Wednesday, ending a three-day rout during which it slumped 11%. Stocks declined on Thursday during the last hour of trading, erasing nearly all of Wednesday's gains.
Baidu, Inc. ( BIDU ) reported adjusted second-quarter 2015 earnings of $1.64 per share, which missed the Zacks Consensus Estimate of $1.80 due to higher-than-expected research & development (R&D) expenses. Sohu.com Inc. ( SOHU ) reported an adjusted loss of 70 cents per share in the second quarter of 2015, which compared favorably with the Zacks Consensus Estimate of a loss of $1.34 per share.
Last Week's Developments
The Shanghai Composite declined 1.3% last Friday, slumping from the day's initial gains of 1.3%. This brought to a close a six-day series of gains, fueled by several government measures taken to prop up markets. The Caixin Media and Markit Economics preliminary PMI declined from 49.4 to 48.2 in July, triggering the day's slide.
This was the index's lowest level recorded in 15 months. These numbers had a significant impact because they were the first numbers reflecting the state of the economy in the third quarter.
The Shenzhen Component Index lost 1.7% while the new economy dominated ChiNext nosedived, falling 2.4%. The CSI 300 declined 1.8%, with sub-indexes of tech and consumer-discretionary stocks losing in excess of 2%. Nine of the index's 10 industry group suffered declines. The benchmark index and the CSI 300 gained 2.9% and 0.6%, respectively over last week.
Meanwhile, the Hang Seng China Enterprises Index declined 1.3%. The H-share index lost 1.4% over the week. Shares in Hong Kong have remained largely unaffected by measures taken by the government which pushed mainland stocks upward.
Markets and the Economy This Week
The Shanghai Composite Index tanked 8.5% on Monday, experiencing its worst one-day slide since Feb 2007. The Shenzhen Composite also declined 7% while the small-cap ChiNext ended 7.4% lower. PetroChina ( PTR ), which is speculated to be supported by market support funds with links to the government, slumped 9.6%.
Adding to the list of concerns was Chinese industrial profits that dropped 0.3% in June on a yearly basis. The decline comes after the metric had gained on an annual basis in the prior two months. China Securities Regulatory Commission vowed to stabilize the market and prevent "systematic risks" by purchasing more shares. The commission also said that those involved in the "malicious shorting of stocks" would be dealt severely.
The CSI 300 slumped 8.6% with a sub-index of industrial stocks sinking by a record level of 9%. A gauge of 30-day volatility of the benchmark reached its highest level in 18 years. The Hang Seng declined 3.1%, while the H-share index slumped 3.8%.
Stocks declined again on Tuesday during a session which witnessed further volatile trading. Fears that sustained government support measures were failing to stem the rout triggered these losses. The Shanghai Composite declined 1.7%, swinging between losses of 5.1% and gains of 1%. While brokerages gained the most, energy and tech stocks lost the most.
The CSI 300 lost 0.2% after declining nearly 5% at one point. Sub-indexes of tech, industrial and energy stocks lost in excess of 3%, emerging as the largest losers for the CSI 300. The Hang Seng increased 0.6% while the Hang Seng China Enterprises Index dipped 0.5%.
The Shanghai Composite rebounded on Wednesday, surging 3.4% and ending a three-day rout during which it slumped 11%. Gains came during the last hour before the markets close, during which the benchmark managed to negate a 1.4% decline. Industrial and tech stocks led gains.
Speculation about further support from the government managed to outweigh the lack of interest among small investors and margin traders. Stocks of brokerages slipped while new equity investors slumped 26% over last week.
The CSI 300 advanced 3.1%. Sub-indexes of telecom, tech and industrial stocks within the CSI 300 added in excess of 5%. The ChiNext surged 4.3% while the Hang Seng increased 0.5%. The Hang Seng China Enterprises Index added 0.9%.
Stocks declined on Thursday during the last hour of trading. These losses nearly erased all of Wednesday's gains as investors remained unclear about why they were taking place. The Shanghai Composite Index declined 2.2%, losing out on a 1.5% advance made earlier during the day. Tech and pharma stocks were the largest losers. A measure of 100-day volatility increased to the highest point in six years.
The CSI 300 declined 2.9%. All of the index's 10 industry groups lost in excess of 2%. The sub-index of healthcare stocks slumped 4.1%, emerging as the largest loser. The gauge for pharma stocks has lost only 5.6% over the last three months, compared to 20% for the CSI 300. The small-cap heavy ChiNext slumped 4.9% while the Hang Seng lost 0.5%. The H-share index declined 1.2%.
Stocks in the News
Baidu, Inc. reported adjusted second-quarter 2015 earnings of $1.64 per share, which missed the Zacks Consensus Estimate of $1.80 due to higher-than-expected research & development (R&D) expenses. The adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Baidu reported revenues of RMB16.6 billion ($2.67 billion), up 30.3% sequentially and 38.3% year over year, which beat the Zacks Consensus Estimate of $2.58 billion. Mobile revenues accounted for 50% of Baidu's total second-quarter revenue, flat sequentially.
For the third quarter of 2015, Baidu expects total revenue in the range of RMB18.170 billion ($2.931 billion) to RMB18.580 billion ($2.997 billion), representing a year-over-year increase of 34.4%-37.4%. Analysts polled by Zacks expect revenues of $2.888 billion.
Sohu.com reported an adjusted loss of 70 cents per share in the second quarter of 2015, which compared favorably with the Zacks Consensus Estimate of a loss of $1.34 per share. In the prior-year quarter, Sohu had reported a loss of $1.16 per share.
Revenues increased 23.5% year over year to $493.6 million and also surpassed the Zacks Consensus Estimate of $475 million. Total online advertising revenues, which include revenues from brand advertising, search and web directory businesses, were $286 million, up 31% year over year.
For the third quarter of 2015, Sohu expects revenues in the range of $470 million-$550 million. The company expects non-GAAP loss per share to be between 55 cents and 80 cents. GAAP loss per share is expected to be in the range of 95 cents to $1.20.
Alibaba ( BABA ) said it will invest $1 billion in its cloud computing division Aliyun. The move is being viewed as an attempt to intensify competition with Amazon's Web Services unit. These funds will be utilized to create Aliyun data centers in Europe, Japan, Singapore and Middle East. Aliyun's president Simon Hu said: "Our goal is to overtake Amazon in four years, whether that's in customers, technology, or worldwide scale."
Additionally, Alibaba is looking to strengthen its network of global cloud computing alliances. This will create a cloud-based environment which can assist businesses from the very first day of operations. Aliyun is entering into a strategic partnership with China's largest software vendor Yonyou Software Co. Ltd or Yonyou which will help them collaborate on various fronts.
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