Asian Stocks Snap Losing Streak Before Bernanke Speech
(Corrects Malaysian Airline System item in story published Aug. 27)
Asian stocks rose this week, snapping four weeks of losses, as exporters and commodity shares gained on speculation U.S. Federal Reserve Chairman Ben S. Bernanke would foreshadow measures to shore up the U.S. recovery.
Asian stocks swung between gains and losses throughout the week as companies across the region reported mixed profit results. Bernanke said yesterday the U.S. central bank still has tools to stimulate an economic recovery, without giving details. The recovery is likely to improve in the second half of this year, he told an annual forum in Jackson Hole, Wyoming.
Li & Fung Ltd. (494), a supplier of toys and clothes to U.S. retailers including Wal-Mart Stores Inc., increased 3.8 percent. Samsung Electronics Co., the world’s second-biggest maker of mobile phones by sales, rose 2.4 percent in Seoul after Steve Jobs resigned as chief executive officer of rival Apple Inc. China Life Insurance Co., the nation’s No. 1 insurer by market value, tumbled 11 percent and Chinese automaker BYD Co. sank 20 percent after they reported lower profit.
“Equity markets are not only looking toward the Jackson Hole speech but also at the real economy,” said Pu Yonghao, chief investment strategist at UBS Wealth Management in Hong Kong. Recent data “are all pointing toward slower growth, if not recession,” he said in a Bloomberg Television interview yesterday before Bernanke spoke.
The MSCI Asia Pacific Index rose 0.7 percent this week to 120.31 The gauge tumbled 14 percent in the previous four weeks as equity indexes in Australia, Hong Kong and Shanghai entered a so-called bear market, tumbling at least 20 percent from their peaks. Investors fled equities amid concern Europe’s debt crisis is worsening and U.S. economy will slow following its credit downgrade by Standard & Poor’s.
Stocks in the Asian benchmark are valued at about 12 times estimated earnings on average, compared with 11.8 times for the S&P 500 and 9.4 times for the Stoxx 600.
Japan’s Nikkei 225 (NKY) Stock Average gained 0.9 percent this week, even after Moody’s Investors Service lowered Japan’s sovereign-credit rating, citing “weak” prospects for cutting the country’s debt burden. South Korea’s Kospi Index climbed 2 percent.
Hong Kong’s Hang Seng Index (HSI) advanced 0.9 percent this week after a report showed China’s factory output may contract at a slower pace in August, easing concern the mainland’s economy is slowing. Shanghai’s Composite Index added 3.1 percent. Australia’s S&P/ASX 200 Index jumped 2.4 percent this week, after falling as much as 3.5 percent. Singapore’s Straits Times Index rose 0.5 percent.
Central bankers from around the world met in Jackson Hole at the conference sponsored by the Federal Reserve Bank of Kansas City on Aug. 26. That’s the same place where Bernanke triggered financial rallies a year ago when he said the Fed was prepared to “do all that it can” to ensure economic recovery. Bernanke’s appearance a year later comes as U.S. manufacturing weakens, consumer confidence tumbles and the unemployment rate holds above 9 percent.
The introduction of further quantitative easing “will provide a short-term relief to the market,” Hong Kong-based Pauline Dan, chief investment officer at Samsung Asset Management, which oversees about $72 billion, said before the meeting.
“Investors are hoping the Fed will show its commitment to supporting growth,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., on Aug. 23. The company manages almost $100 billion. “There’s a real risk of disappointment if some sort of strong commitment doesn’t appear.”
Samsung Electronics, Apple’s biggest competitor in smartphones and tablet computers, surged 6.8 percent to 726,000 won in Seoul this week after Steve Jobs resigned as Apple chief executive officer.
BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, gained 3 percent to A$38.64 this week in Sydney, while Inpex Corp. (1605), Japan’s No. 1 energy explorer, jumped 3.7 percent to 492,500 yen in Tokyo. Glencore International Plc, the world’s largest listed commodity trader, surged 5.9 percent to HK$47.50 in Hong Kong.
Oil advanced for the first time in five weeks on speculation that economic stimulus in the U.S. will bolster demand in the world’s largest energy consuming nation. Crude oil for October delivery rose 7 cents to settle at $85.37 a barrel on the New York Mercantile Exchange yesterday.
The London Metal Index of prices for six metals including copper and aluminum advanced 2.5 percent this week.
Among stocks that fell, China Life tumbled 11 percent to HK$19.18 this week in Hong Kong after saying first-half profit fell 28 percent from a year earlier.
Of the 624 companies in the Asia-Pacific index that reported net income from July 11 to by 6:35 p.m. on Aug. 26, 45 percent reported earnings that exceeded analysts’ estimates while 33 percent fell short.
BYD, an automaker part-owned by Warren Buffett’s Berkshire Hathaway Inc., dropped 20 percent to HK$15.98 after saying its first-half profit tumbled 89 percent.
Malaysian Airline System Bhd., the national carrier, sank 9.6 percent to 1.50 ringgit in Kuala Lumpur after posting a second straight quarterly loss.
Standard Chartered Plc, the U.K.’s second-biggest bank by market capitalization, sank 1 percent to HK$168.30 and French cosmetics maker L’Occitane International SA sank 5 percent to HK$17.06 this week in Hong Kong amid concern the region’s sovereign debt crisis will worsen after German Chancellor Angela Merkel said she’ll resist pressure to back common euro-area bonds as a means to solve the region’s debt crisis.
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