Saturday, July 2, 2011

Asian Stocks Gain a Second Week on Greek Debt, U.S. Optimism

Asian stocks rose, driving the region’s benchmark index up for a second straight week and paring a quarterly decline, amid optimism Greece will avoid default, and signs a U.S. economic recovery is strengthening, boosting prospects for Asian exports and bank earnings. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest publicly traded bank, jumped 5.9 percent this week in Tokyo on speculation Greece will avoid a default that might destabilize the region’s banking system. LG Electronics Inc., which gets 30 percent of its revenue in North America, rose 2.8 percent in Seoul. BHP Billiton Ltd. (BHP), the world’s largest mining company and Australia’s No. 1 oil producer, increased 3.4 percent in Sydney as oil and metal prices climbed.

“The most negative fears about global growth have been soothed,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “Events in the U.S. and Greece were weighing on global growth expectations and risk appetite, but the U.S. data was reasonable and Greece has passed a major hurdle.”

The MSCI Asia Pacific Index rose 2.5 percent to 135.53 in the past five days, closing at the highest level in a month, having last week snapped its longest series of weekly losses since 2004.

The gauge sank 0.6 percent in the three months to June 30, its second straight quarterly decline amid concern earnings in the Asia-Pacific region would suffer should Greece default on its sovereign debt, and on signs U.S. growth may be weakening at the same time as China’s anti-inflation measures slow its economy.

Japan, South Korea

Japan’s Nikkei 225 (NKY) Stock Average gained 2 percent this week and South Korea’s Kospi Index rose 1.7 percent. Hong Kong’s Hang Seng Index, which was closed for a public holiday July 1, climbed 1 percent. Australia’s S&P/ASX 200 Index advanced 1.8 percent.

China’s Shanghai Composite Index gained 0.5 percent. An index of Chinese manufacturing dropped to the lowest level since February 2009 in June, indicating Premier Wen Jiabao’s campaign to tame inflation has damped growth in the world’s second- biggest economy.

Stocks rose across the region this week as Euro-area finance ministers moved closer to giving Greece another aid payment and German banks agreed to roll over their Greek bond holdings, giving the country more time to pay its debts.

Shares of financial companies advanced amid speculation that a Greek rescue would prevent a banking crisis in Europe and lower costs for banks that rely on debt markets for funding.

Boosting Reserves

Westpac Banking Corp. (WBC), Australia’s second-largest lender by market value, gained 3.1 percent to A$22.03. HSBC Holdings Plc (HSBA), Europe’s biggest bank by market value, gained 0.9 percent to HK$77.05 in Hong Kong, while Standard Chartered Plc, which makes most of its revenue in emerging markets, added 3.8 percent to HK$200.80.

The Basel Committee on Banking Supervision said in a statement June 25 that banks deemed too big to fail must hold as much as 2.5 percentage points in additional capital as part of efforts to avert another financial crisis.

Goldman Sachs Group Inc. analysts said June 27 that the capital requirement rules were “positive” for the Japanese banks they cover because the country’s lenders are well capitalized already and unlikely to fall into that category.

Mitsubishi UFJ jumped 5.9 percent to 398 yen in Tokyo. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest publicly traded bank by market value, increased 4.2 percent to 2,500 yen.

‘Twists, Turns’

“There will still be a lot of twists and turns, but Greece has been able to avoid a worst-case scenario,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That makes it easier for investors to take on risk.”

Japan’s major banks also rose after they were raised to “overweight” from “market weight” by Deutsche Bank AG, which said first-quarter earnings may show “good progress” and concern is receding that lenders will need to raise capital.

The MSCI Asia Pacific Index has lost 1.6 percent this year, compared with a gain of 6.5 percent by the Standard & Poor’s 500 Index and a drop of 0.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.9 times estimated earnings on average, compared with 13.6 times for the S&P 500 and 11.2 times for the Stoxx 600.

Exporters climbed this week after a gauge of U.S. manufacturing unexpectedly improved and confidence among consumers in the world’s biggest economy rose to the highest level in 10 weeks.

Fanuc Orders Surge

LG Electronics rose 1.6 percent to 84,900 won in Seoul. James Hardie Industries SE (JHX), the largest seller of home siding in the U.S., climbed 4.9 percent to A$5.74 in Sydney.

Fanuc Corp., which gets about 75 percent of its revenue outside Japan, jumped 9.4 percent to 14,110 yen after a report by Nomura Holdings Inc. showed that orders surged 14 percent in the three months ended March 31 compared with the previous quarter, driven by demand for industrial robots in the U.S. and Europe.

Toyota Motor Corp. (7203), the world’s biggest carmaker by market value, gained 1.5 percent to 3,335 yen in Tokyo, while Mazda Motor Corp. (7261), a Japanese carmaker that gets 18 percent of sales from Europe, surged 5.3 percent to 217 yen.

Commodity stocks advanced as strengthening confidence in a global recovery drove oil in New York and a measure of primary metals traded in London higher.

Mining Stocks

BHP Billiton increased 3.4 percent to A$43.77 in Sydney. Rio Tinto Group, the world’s second-largest mining company by sales, climbed 3 percent to A$82.83. Jiangxi Copper Co., China’s biggest producer of the metal, gained 3.4 percent to HK$25.85 in Hong Kong, while China Petroleum & Chemical Corp. (600028), which refines, produces and trades fuel, increased 3.7 percent to HK$7.83.

Crude rose 4.2 percent in the week, while the London Metal Exchange Index of prices for six metals including copper and aluminum rose 3.4 percent.

“There’s less anxiety about the issues surrounding Greece’s debt,” said Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. in Tokyo. “Investors are starting to move into riskier assets.”

Japanese utilities advanced after Kyodo News reported this week that the town of Genkai in southwestern Japan will let Kyushu Electric Power Co. restart reactors, easing concern local opposition to nuclear power will damage the industry.

Kyushu Electric gained 8.7 percent to 1,460 yen in Tokyo. Kansai Electric Power Co., a utility that generates 43 percent of its power from nuclear plants, climbed 6 percent to 1,585 yen.

Nuclear Accident

Tokyo Electric Power Co., operator of the Fukushima Dai-Ichi plant at the center of the worst nuclear accident in 25 years, rose 6.5 percent to 328 yen after the utility’s shareholders voted against abandoning the nuclear power business, defying growing public opposition to atomic energy in the wake of the disaster.

Kansai also reinforced the status quo, with shareholders rejecting a motion to halt reactors. Shareholders of Tohoku Electric Power Co. and other regional energy providers also voted down proposals against nuclear power.

Source: www.bloomberg.com

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