Luring Beyonce Fashion Fans Spurs Chonese Online Retailer LightInTheBox Rally

January 8, 2014 Leave a comment

Luring Beyonce Fashion Fans Spurs LightInTheBox Rally

LightInTheBox Holding Co. (LITB), a Chinese online retailer, surged 20 percent New York after saying it bought Seattle-based Ador Inc., a website that sells clothes and accessories similar to those worn by celebrities from Beyonce Knowles to Taylor Swift.American depositary receipts of the Beijing-based company jumped the most in seven months, with trading volume four times the 90-day average. The Bloomberg China-US Equity Index of the most traded Chinese stocks in the U.S. dropped 0.8 percent to 102.25 yesterday as a private gauge of China’s service industries spurred concern that economic growth is slowing. Semiconductor Manufacturing International Corp. (SMI) fell, trading at the widest discount to its Hong Kong shares in three weeks.

LightInTheBox, which sells everything from $80 wedding gowns to $2 iPhone gadgets, will have its first office in the U.S. following the acquisition, it said in a statement yesterday. Ador collects images of celebrities online and directs users who are looking to shop for similar styles. Short interest in LightInTheBox has risen to 12 percent of outstanding shares, from a low of 10.2 percent in October, according to Markit, a London-based research firm.

“The market may interpret it as a path for growth for LightInTheBox,” Josef Schuster, the founder of IPOX Schuster LLC in Chicago, a research firm focusing on initial public offerings, said by phone yesterday. “That may have triggered short sellers to cover their short positions, driving up the stock price.”

ETF Slides

In a short sale, an investor borrows a security and sells it, expecting to profit from a decline by buying it back at a lower price.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., slipped 1.8 percent to $36.01 in New York, after retreating 4 percent last week. The Standard & Poor’s 500 Index dropped 0.3 percent after a report showed weakness in the services industry.

LightInTheBox jumped to $9.81, the highest since Nov. 18. The rally helped erase a loss since the company’s June IPO. The stock slumped 15 percent last year, the only decline among eight Chinese companies that completed their U.S. IPOs in 2013.

The company, which surged 22 percent on its debut trading June 6, tumbled 40 percent on Aug. 20 and sank 23 percent on Nov. 19 after providing quarterly sales forecasts that missed analysts’ average estimates.

Growth Market

The deal with Ador involved an “undisclosed amount of cash,” LightInTheBox said in the statement. Ador’s employees will join LightInTheBox and will represent the company in the U.S., an important growth market, it said. The move underscores LightInTheBox’s commitment to building a global e-commerce company, according to the statement, which cited Chairman and Chief Executive Officer Alan Guo.

Guangshen Railway Co., which runs the only train line linking mainland China to Hong Kong, sank as railway stocks fell in Shanghai and Hong Kong trading after China Railway Group Ltd. said in a Jan. 5 regulatory filing its president died in an accident.

Guangshen’s ADRs tumbled 5.9 percent to $21.97 in New York, retreating the most since June. Volume was four times the 90-day average compiled by Bloomberg.

Semiconductor Manufacturing, a Shanghai-based chipmaker, slumped 3.8 percent to $3.82, the biggest decline in three weeks. Its ADRs, each representing 50 underlying shares in the company, traded 2.9 percent below its stock in Hong Kong, the largest discount since Dec. 11.

Youku Advances

E-Commerce China Dangdang Inc. (DANG), the nation’s biggest online book retailer, dropped 4.5 percent to a three-week low of $9.

Youku Tudou Inc. (YOKU), owner of China’s biggest video websites, jumped 7.7 percent to $33.92, the highest price since August 2011.

The Hang Seng China Enterprises Index in Hong Kong fell 1.4 percent to 10,290.55, the lowest level since Nov. 13. The Shanghai Composite Index (SHCOMP) sank 1.8 percent to 2,045.71, dropping to the lowest price since Aug. 8 after a three-day slump.

China’s services purchasing managers’ index decreased to 50.9 in December from 52.5 the previous month, according to HSBC Holdings Plc and Markit Economics Ltd. yesterday. A reading above 50 represents an expansion.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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