Most Asian stocks climbed, with the regional benchmark near a 2 1/2-year high, as Japanese shares advanced after news reports of business alliances. Chinese stocks reversed earlier gains after the country’s official interest rates were raised over the weekend.
Elpida Memory Inc., the world’s third-largest maker of computer-memory chips, gained 1.6 percent after Kyodo news reported it is in talks with Taiwan semiconductor companies on a business tie-up. Canon Inc. and Hitachi Ltd. climbed at least 0.7 percent after the Nikkei newspaper said Taiwan’s Hon Hai Precision Industry Co. plans to acquire control of their liquid- crystal display venture. Industrial & Commercial Bank of China Ltd., the world’s No. 1 lender by market value, fell 0.7 percent after gaining as much as 1 percent in the wake of China’s decision to increase interest rates as it battles inflation.
The MSCI Asia Pacific Index gained 0.2 percent to 135.52 as of 7:33 p.m. in Tokyo, with four stocks gaining for every three that fell. The gauge earlier touched an intraday high of 135.72, its topmost level since July 24, 2008.
“There’s selective buying on company news,” Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., which manages about $57 billion. “The business environment for manufacturers, especially semiconductor-related makers, is gradually getting better.”
Japan’s Nikkei 225 Stock Average gained 0.8 percent. South Korea’s Kospi Index slipped 0.4 percent. Taiwan’s Taiex index climbed 0.4 percent. India’s Sensex Index slipped 0.2 percent. Markets in Australia, New Zealand and Hong Kong are closed today for a holiday.
The Shanghai Composite Index fell 1.9 percent, reversing an earlier gain of as much as 1.5 percent. China raised interest rates for the second time in just over two months on Dec. 25 after consumer prices jumped the most in 28 months and the government forecast “relatively high” inflation in the first half of 2011.
The benchmark one-year lending rate will rise by a further 25 basis points to 5.81 percent and the one-year deposit rate will climb by the same amount to 2.75 percent, the People’s Bank of China said in a statement on its website on Dec 25. It became effective yesterday.
“There’s a realization setting in that perhaps China’s problems are a bit more serious, and this is the first of many increases and this is going to result in tighter liquidity, and tighter liquidity is bad for stock prices,” said Peter Elston, a Singapore-based strategist at Aberdeen Asset Management Plc, which oversees about $281.6 billion.
S&P 500 Futures
Futures on the U.S. Standard & Poor’s 500 Index fell 0.4 percent today. The gauge declined on Dec. 23 after a five-day rally sent the average price to earnings ratio of stocks in the Standard & Poor’s 500 Index to the most expensive level since June, offsetting a rebound in orders for durable goods and a drop in unemployment claims. The measure was closed on Dec. 24.
The MSCI Asia Pacific index has risen 12 percent this year through Dec. 24 on speculation that growth in corporate profits will weather Europe’s debt crisis, Chinese steps to curb property-price inflation and concern about the pace of the U.S. economic rebound. Stocks on the Asian benchmark trade at 14.8 times estimated earnings, compared with about 22 times at the beginning of the year.
Elpida gained 1.6 percent to 942 yen. The company is in talks with Powerchip Technology Corp. and other Taiwanese chip companies on business tie-ups including mergers and capital alliances, Kyodo news agency reported.
Hitachi, Hon Hai
Dai Nippon Printing Co., a provider of printing services, rallied 1.8 percent to 1,122 yen. The company will triple production of film used for lithium-ion batteries and solar cells, the Nikkei newspaper reported, without saying where it got the information.
Hitachi Ltd. rose 0.7 percent to 411 yen and Canon Inc. climbed 0.9 percent to 4,310 yen. The Nikkei newspaper said Taiwan’s Hon Hai Precision Industry Co. plans to acquire control of Hitachi and Canon’s liquid-crystal display venture for 100 billion yen ($1.2 billion). Hon Hai was unchanged at NT$117.
Daewoo Shipbuilding & Marine Engineering Co. advanced 2.9 percent to 37,400 won in Seoul. The shipyard said it estimates orders will reach $11 billion next year, with operating profit at 1 trillion won ($869 million) and sales at 10 trillion won.
Hero Honda Motors Ltd., India’s biggest motorcycle maker, gained 0.4 percent to 1,937.85 rupees, after the Mint reported Dec. 25 that Hero Group is considering a yen-denominated loan to fund a buyout of Honda Motor Co.’s holding in the venture. Hero Group’s spokesman Ashwani Sharma declined to comment. The report didn’t say where it obtained the information.
Beijing Car Curbs
Hyundai Motor Co., South Korea’s biggest automaker by market capitalization, declined 3.4 percent to 172,500 won. The stock fell for a second day after the city of Beijing decided to limit the number of new passenger vehicles in the Chinese capital to ease congestion. Affiliate Kia Motors Corp. declined 3.5 percent.
“Beijing’s move to limit the number of new cars as well as China’s fresh monetary tightening have raised some concern about demand there and are affecting sentiment today,” said Song Seong Yeob, a fund manager at KB Asset Management Co. in Seoul, which oversees the equivalent of $17 billion in assets.
ICBC fell 0.7 percent to 4.15 yuan in Shanghai. China Vanke Co., the country’s largest-listed property developer, fell 2.9 percent to 8.75 yuan in Shenzhen. Vanke earlier increased as much as 1.7 percent.
“Investors were initially relieved as this interest-rate increase has been priced into stocks for a long time,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. “However they’re now thinking about the future; that one increase won’t be enough to bring inflation under control and more rate hikes will be needed. That’ll keep depressing valuations of stocks.”
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