Asian Stocks Pare Losses as Europe Takes Steps to Resolve Its Debt Crisis
Asian stocks pared weekly losses amid optimism Europe will act to contain its debt crisis and as companies from Samsung Electronics Co. to Aeon Co. boosted profit forecasts.
HSBC Holdings Plc, Europe’s biggest lender by market value, gained 1.2 percent in Hong Kong. Samsung Electronics, the world’s second-largest maker of mobile phones, surged 2.4 percent in Seoul, while Aeon, Japan’s biggest supermarket company, gained 3.2 percent in Tokyo. Sony Corp. fell 6.1 percent in Tokyo after Nomura Holdings Inc. cut its rating and the Wall Street Journal reported the company is close to an agreement to buy Ericsson AB’s stake in their mobile-phone venture.
“It certainly sounds like policy makers in Europe are understanding the situation with the banking system and getting more willing to recapitalize the banks,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That has been a positive step.”
The MSCI Asia Pacific Index slid 0.2 percent to 112.95 this week, erasing most of a decline as steep as 5.1 percent, as the European Commission pushed for a coordinated capital injection for banks to shield them from the fallout of a potential Greek debt default.
Australia’s S&P/ASX 200 advanced 3.9 percent after the country’s central bank left its benchmark interest rate unchanged and signaled it has scope to lower the nation’s borrowing costs if necessary as inflation eases.
Japan’s Nikkei 225 (NKY) Stock Average fell 1.1 percent. South Korea’s Kospi Index dropped 0.6 percent and Hong Kong’s Hang Seng Index gained 0.7 percent. China’s markets were shut for a week-long holiday.
Banks and exporters rallied after European Central Bank President Jean-Claude Trichet said the ECB will resume purchases of mortgage-backed securities and reintroduce yearlong loans for banks. In London, the Bank of England boosted its asset-purchase program by more than a third to 275 billion pounds ($425 billion).
HSBC rose 1.2 percent to HK$61.60 in Hong Kong. National Australia Bank Ltd. (NAB), the nation’s largest lender to businesses, climbed 6.2 percent to A$23.76 in Sydney. Commonwealth Bank of Australia, the nation’s biggest bank, added 1.5 percent to A$46.25.
Esprit Holdings Ltd. (330), a Hong Kong-based clothier that counts Europe as its biggest market, climbed 8.1 percent to HK$10.32 in Hong Kong. Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, gained 3.4 percent to HK$9.04. LG Electronics Inc., the world’s fourth- largest maker of mobile phones that gets about 16 percent of sales from Europe, jumped 7.4 percent to 74,000 won in Seoul.
Samsung Electronics, South Korea’s biggest exporter of consumer electronics, climbed 2.4 percent to 860,000 won in Seoul. The company reported third-quarter operating profit that beat analyst estimates. Aeon advanced 3.2 percent to 1,082 yen in Tokyo after raising its full-year profit forecast to a record following the acquisition of two grocery chains.
Raw material producers rallied as copper futures posted its biggest advance in three months. BHP Billiton Ltd., the world’s largest mining company, increased 6.2 percent to A$37.20. Rio Tinto Group Ltd., the world’s No. 2 mining company by sales, rose 7.4 percent to A$66.40. Jiangxi Copper Co., China’s biggest producer of the metal, jumped 2.8 percent to HK$14.18 in Hong Kong.
The MSCI Asia Pacific Index has declined 18 percent this year amid concern the global economy is poised for another recession as Europe’s debt crisis worsens and U.S. economic growth falters.
“Fear is still in the driver’s seat,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “With Europe sliding into recession, credit markets continue to worsen, and that will affect growth in Asia by reducing export demand. There’s this worry that Europe is going to implode and drag down the U.S. with it.”
Goldman Sachs Group Inc. on Oct. 4 lowered its forecast for earnings growth in Asia excluding Japan after reducing its outlook for global economic expansion. Stocks in the MSCI Asia Pacific Index were valued at 11.53 times estimated earnings on average, compared with 11.6 times for the Standard & Poor’s 500 Index and 9.8 times for the Stoxx Europe 600 Index.
Among stocks that dropped this week, Sony Corp. tumbled 6.1 percent to 1,415 yen in Tokyo, after Nomura cut its rating to “neutral” from “buy,” saying the company will have difficulty cutting costs at its television business.
Separately, Sony is closer to an agreement to buy Ericsson AB’s stake in their mobile-phone venture, according to a Wall Street Journal report, citing people familiar with the matter.
“The deal could amount to a huge financial burden on Sony,” said Hideki Yasuda, a Tokyo-based analyst at Ace Securities Co. in Tokyo with a “neutral” rating the stock. “On top of that, there could be a costly fee for using patents reserved by Ericsson.”
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