Bear Market, Liquidity Crunch Hits Chinese Stocks

Chinese stocks are hurting, including E Commerce China Dangdang Inc (ADR) (NYSE:DANG), Baidu Inc (ADR) (NASDAQ:BIDU), and JinkoSolar Holding Co., Ltd. (NYSE:JKS)

Jun 29, 2015 at 3:40 PM
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U.S.-listed Greek stocks aren't the only international equities suffering from news. A number of Chinese names are also getting roughed up amid a liquidity crunch and an emerging bear market. Among them are E Commerce China Dangdang Inc (ADR) (NYSE:DANG), Baidu Inc (ADR) (NASDAQ:BIDU), and JinkoSolar Holding Co., Ltd. (NYSE:JKS).

  • DANG is off 1.7% at $9.01, and since peaking at $11.50 earlier this month, has dropped over 21%. Earlier, though, the stock was staring at an even steeper 5.9% loss, and it remains on the short-sale restricted list. As such, puts are flying off the shelves at nine times the expected intraday rate -- though most of the volume resulted from a block of 5,222 August 8 puts that was sold to open (along with an identical lot of August 10 calls) as part of a split-strike synthetic long. While this trader is confident E Commerce China Dangdang Inc will rebound, analysts are less convinced. Just one brokerage firm considers the stock worthy of a "buy" rating, compared to five "holds" and one "strong sell."

  • BIDU has stumbled to a 1.6% loss at $200.18, bringing its year-to-date deficit to 12%. This is welcome news for a recent rush of option bears. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 0.89 Baidu Inc puts for every call -- a ratio that ranks in the 93rd percentile of its annual range.

  • Like sector peer Canadian Solar Inc. (NASDAQ:CSIQ), JKS has taken a severe haircut, down 7.5% at $28.24. In fact, the shares are approaching their 80-day moving average, which hasn't been breached since early February. This is a welcome development for short sellers. Nearly 18% of JinkoSolar Holding Co., Ltd.'s float is sold short, representing more than four sessions' worth of trading activity, at typical volumes.

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