Aug. 24 (Bloomberg) -- Chinese stocks advanced in New York to complete its second weekly rally, as Renren Inc. jumped after agreeing to sell a majority stake in its group-buying website unit to Baidu Inc. Web game operator Perfect World Co. surged.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. added 0.3 percent to 97.12 yesterday, rising 0.7 percent this week. Social media company Renren gained the most in eight days while Baidu retreated. Perfect World surged 6.5 percent, and Bona Film Group Ltd. sank the most in two months.
Solar makers and commodity producers have led gains in the China-US gauge this week as better-than-estimated data showed a global recovery in manufacturing. Baidu, China’s most-used online search engine, agreed yesterday to buy about 59 percent of social commerce operator Nuomi.com for about $160 million. Jefferies Group LLC raised its recommendation on Renren to hold from a sell equivalent.
“Renren makes a lot of profit from the deal, as its 41 percent stake in Nuomi also becomes more valuable based on Baidu’s purchase price,” Ming Zhao, the founder of Hong Kong- based 86Research Ltd. said by e-mail yesterday. “The deal is expensive to Baidu in math, but it has strategic long-term meaning, and it can grow Nuomi bigger.”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., slipped 0.4 percent to $35.66 for a 1.4 percent weekly decline. The Standard & Poor’s 500 Index added 0.5 percent in its the first weekly gain in three weeks, as investors watched Federal Reserve officials for signals on stimulus cuts after data showed home sales plunged.
Renren climbed 4.7 percent to $3.56 yesterday, jumping as much as 12 percent after its deal with Baidu was announced. The acquisition is expected to be completed in the fourth quarter, the Beijing-based companies said in a joint statement yesterday. Nuomi.com had merchandise sales of about $120 million in the second quarter, according to the statement.
Baidu slipped 0.6 percent yesterday to $138.64 in New York, trimming its gain this week to 3 percent.
Perfect World surged to $20.23, ending the week up 0.5 percent. Piper Jaffray Cos analyst Mark Marostica raised his price estimate for Perfect World by 67 percent to $25, maintaining a rating equivalent to buy.
Home Inns & Hotels Management Inc., operator of China’s biggest online hotel chain, increased 6 percent to $34.84, the highest level since November 2011. Trading volume was twice the three-month average, data compiled by Bloomberg showed.
Bona, a filmmaker based in Beijing, plunged 5.2 percent yesterday to $4.74 in New York, slumping the most in two months. The company is scheduled to report second-quarter results Aug. 29 after U.S. trading closes.
The Hang Seng China Enterprises Index dropped 0.4 percent to 9,932.35 for a 2.8 percent slide this week. The Shanghai Composite Index slipped 0.5 percent in the week to 2,057.46.
--Editors: Marie-France Han, Rita Nazareth