New Oriental Education & Technology Group Inc. (EDU) surged from a five-year low, leading gains in Chinese stocks traded in New York, after refuting Muddy Waters LLC’s report that the company inflated financial statements.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York added 2 percent to 86.43 at 2:25 p.m., snapping a three-day slump. New Oriental jumped 19 percent after a nine-day slide sent shares to the lowest since March 2007. China Unicom (Hong Kong) Ltd. (CHU) rallied the most in two weeks as third-generation mobile users increased. Qihoo 360 Technology Co. gained after its chief financial officer said new advertising software will boost sales.
New Oriental, China’s largest private education services provider, said yesterday that Muddy Waters’ allegations in a July 18 report contained errors and was misleading. Its American depositary receipts capped a 57 percent two-day slump after short seller Muddy Waters, whose call on Sino-Forest Corp. sparked a 74 percent drop, questioned the company’s accounting practices and the U.S. Securities and Exchange Commission said it’s investigating the company. The slump sent Chinese stocks to trade at the smallest premium versus peers on the Standard & Poor’s 500 Index in two months.