The Zacks Analyst Blog Highlights: Baidu, 21Vianet Group, JinkoSolar Holding, PetroChina and China Mobile
For Immediate Release
Chicago, IL – October 17, 2014 – 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-Free Report), 21Vianet Group, Inc. (VNET-Free Report), JinkoSolar Holding Co., Ltd. (JKS-Free Report), PetroChina Co Ltd. (PTR-Free Report) and China Mobile Ltd. (CHL-Free Report).
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Here are highlights from Thursday’s Analyst Blog:
China Stock Roundup
Markets had a dismal week following profit taking and a decline in investor sentiment following global economic concerns. Losses incurred by oil and consumer staples companies negated the gains from better-than-expected exports on Monday. Stocks took losses once again on Tuesday as investors booked profits once again and global growth concerns dampened sentiment.
The benchmark index rebounded on Wednesday as airline, brokerages and pharma stocks clocked up gains. The Shanghai Composite Index experienced its sharpest fall in three weeks following losses by property and commodity stocks.
Baidu, Inc. (BIDU-Free Report) purchased a controlling stake in Brazil-based online discount company Peixe Urbano. Meanwhile, 21Vianet Group, Inc. (VNET-Free Report) has established a joint venture with Foxconn Technology Group, a prominent global electronics manufacturer.
Last Week’s Developments
Last Friday, the Shanghai Composite Index declined 0.6% ahead of the release of economic data for September. Analysts took the view that investors were playing safe before the upcoming crucial economic reports. This includes data on trade and inflation. Shares of insurance companies declined even as the CSI 300 lost 0.6%. The Hang Seng China Enterprises Index declined 1.7%. H-shares lost their premium over shares traded on mainland exchanges before the commencement of the new trading link.
The H-share index lost 0.5% over the week, marking its fifth consecutive week of losses. The Shanghai Composite Index gained 0.5%, while the CSI 300 moved up 0.6% over the week. At that point, the benchmark index had increased 12% over the year following speculation that the government would undertake further reform measures to prevent an imminent economic slowdown. Further, the upcoming exchange link between Shanghai and Hong Kong is expected to lead to higher fund inflows.
Markets and the Economy This Week
Stocks declined for a second successive day on Monday. Losses incurred by oil and consumer staples companies negated the boost received by markets from better-than-expected exports data. According to the Bejing-based customs administration, exports moved up 15.3% compared to year-ago numbers.
However, oil prices plummeted leading to a decline in stocks of oil producers. Iran, Saudi Arabia and Iraq slashed crude prices. Brent futures continued to fall, marking the longest such decline in nearly four years. West Texas Intermediate also declined, following its largest weekly loss since January.
The Shanghai Composite Index declined 0.4%, reducing the day’s losses by nearly 1.4%. The CSI 300 declined 0.5%. The Hang Seng China Enterprises Index lost 0.2%, reducing the day’s losses by around 1.3%. H-shares incurred losses after investor concerns over protests in Hong Kong intensified.
Analysts were of the view that the markets have peaked and cannot rise further despite positive economic data. American equity markets took losses and more economic reports were expected over the week, creating further uncertainty.
The Shanghai Composite Index lost 0.3% on Tuesday as investors booked profits once again. Global economic growth concerns triggered off selling as shares experienced a third day of losses. The CSI 300 and the Hang Seng China Enterprises Index also declined 0.3%. Protests in Hong Kong added to global concerns leading to losses for the H-share index.
Analysts opined that the market was experiencing a decline as investors were booking profits. This was a consequence of the highs experienced in the recent past. They also opined that investor remained wary ahead of the Shanghai Hong Kong trading link and China’s third quarter GDP numbers.
Stocks rebounded on Wednesday, as investors ignored inflation data which came in below expectations. Airline, brokerages and pharma stocks clocked up gains. China’s PPI for September moved down 1.8% year on year, contrary to analyst expectations of a lower decline.
This was the 31st successive monthly decline for the index, reflecting the travails of Chinese industry as demand declines. The greater-than-expected decline is expected to place further pressure on their finances. The CPI increased 1.6%, rising below expectations as well as below the 2% increase experienced in August.
The Shanghai Composite Index moved up 0.6% while the CSI 300 gained 0.7%. The Hang Seng China Enterprises Index gained 0.3%. H-shares experienced gains for the first time in four days as a decline in oil prices fuelled gains for transport companies. Analysts took the view that a reduction in oil prices would reduce operating costs for transport companies, which in turn would aid earnings.
The Shanghai Composite Index declined 0.7% today, experiencing the sharpest fall in three weeks. Losses were led by property and commodity stocks following concerns that recent gains made by stocks were excessive. A dismal global outlook also contributed toward lowering investing sentiment. Analysts continue to believe that the recent slump is a phenomenon fuelled by profit-taking. This has been exacerbated by global factors.
Both the Hang Seng and the Hang Seng China Enterprises Index lost 1%. The H-share index is experiencing a correction this week following a decline of 10% from a high achieved on Sep 8. Concerns that protests demanding free election in Hong Kong would affect retailers led to these reverses. The IMF’s reduction of its global growth forecast is dampening investor sentiment.
Stocks in the News
Baidu, Inc. has purchased a controlling stake in Brazil-based online discount company Peixe Urbano. The size of Baidu’s stake and the size of the deal remain undisclosed. This is the latest step in Baidu’s efforts to increase its presence in the largest economy in Latin America.
Per the terms of the deal, the management team of Peixe Urbano, led by CEO and co-founder Julio Vasconcellos, will continue to operate autonomously. The Brazilian company was launched in 2010 as the country’s answer to Groupon. However, the company has declined after some years of growth.
Baidu expects to utilise the platform to forge relationships with service providers. This will help to establish its search engine in Brazil. The country’s ecommerce market is expected to expand at an annual rate of 18% by 2016 as per several consulting firms such as A.T. Kearney.
21Vianet Group, Inc. has established a joint venture with Foxconn Technology Group, a prominent global electronics manufacturer. The largest Chinese carrier-neutral Web data center services provider and Foxconn will invest $25 million in the newly formed Smart Time Technologies Limited. 21Vianet and Foxconn will hold 60% and 40% equity interest in the JV.
The newly formed company will help the two partners to create a global supply chain for cloud computing and Internet data center infrastructure. The two companies have also announced that they will create a 21Vianet-Foxconn Internet Infrastructure and Engineering Technology Research and Development Center. The opening of this center will enhance technological cooperation between 21Vianet and Foxconn.
JinkoSolar Holding Co., Ltd. (JKS-Free Report) will provide 21.5 MW PV solar modules to be used for constructing the Searchlight solar project. This project is located near Searchlight N.V. around 50 miles south of Las Vegas.
This project was purchased by Bright Plain Renewable Energy (:BPRE) and an affiliate of D. E. Shaw Renewable Investments, L.L.C. (:DESRI) from American Capital Energy, which was the initial developer of Searchlight. Engineering, procurement and construction will be handled by Signal Energy who will also provide operations and maintenance for the project upon completion.
During the construction of the project, 70,525 high-efficiency modules produced by JinkoSolar will be used. The project will generate around 45,000MWh of clean energy for energy customers in NV once the project is connected to the grid this year.
PetroChina Co Ltd.’s (PTR-Free Report) parent company, China National Petroleum Corp. (:CNPC), has received approval from the Russian government to commence designing and construction of Chinese end of the China-Russia natural gas pipeline.
CNPC will be designing the Chinese end of the massive 4,000 kilometers pipeline that is anticipated to transport gas worth $400 billion. The Chinese section of the pipeline will start from northeast China's Heilongjiang Province, span across several intermediate provinces and finally end at Shanghai. The pipeline construction is likely to commence in the first half of 2015 and is expected to complete in 2018.
The Russian end of the pipeline has already begun construction work on Sep 1. It is being built by the state-controlled energy firm, Gazprom. Russia will expectedly begin gas supply in 2018, which is anticipated to reach about 38 billion cubic meters (bcm) per year.
China Mobile Ltd. (CHL-Free Report) recently awarded a $970 million contract to Nokia Networks. The contract entails the supply of wireless infrastructure equipment for the China Mobile’s ongoing 4G TD-LTE network deployment.
Per the contract, Nokia Networks will provide Evolved Packet Core (:EPC), GSM wireless networking equipment, core application platforms, Operation Support Systems software and services in 2014 and 2015.
China Mobile is the largest wireless operator in the world in terms of subscriber count. Currently, the company supports more than 30 million customers on its home-grown LTE-TDD (Long-Term Evolution-Time Division Duplex) network.
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