Asian Stocks See Biggest Gains Since 2009 on Europe Debt Deal
Asian stocks surged by the most this week in more than two years after a breakthrough in Europe boosted confidence the debt crisis will be contained, U.S. growth accelerated, and China hinted at easing monetary policy.
Esprit Holdings Ltd. (330), a clothier that gets most of its revenue in Europe, gained 19 percent this week. Mitsubishi Corp., Japan’s biggest trading company by market value, jumped 12 percent after commodity prices surged. James Hardie Industries SE (JHX), a building-materials supplier that relies on the U.S. for two-thirds of its sales, rose 11 percent after the nation’s economy grew at the fastest pace in a year. CSR Corp., a Chinese trainmaker, soared 59 percent on speculation China will ease monetary policies.
“Markets have been very oversold on the Europe’s debt concern, so development in the region’s debt talks and positive economic data from the U.S. forced people to cover their shorts this week,” said Shintaro Takeuchi, who helps manage about $20 billion at Tokio Marine & Nichido Fire Insurance Co. “We can expect a steady market towards the end of the year.”
The MSCI Asia Pacific Index surged 7.5 percent this week, its steepest weekly advance since the period ended May 8, 2009, after European leaders talked bondholders into accepting writedowns on Greek debt and boosted a regional rescue fund’s capacity. The gauge dropped the most in a month last week on concern Europe would struggle to reach a resolution.
The Asian benchmark’s surge this week pared its loss this year to about 9.5 percent. Shares fell this year amid concern Europe’s debt crisis will disrupt the financial system, cutting the value of shares on the index to about 12.6 times estimated earnings on average. The gauge has jumped 10 percent this month.
Japan’s Nikkei 225 (NKY) Stock Average rose 4.3 percent this week after the nation’s exports increased more than expected in September, and after the Bank of Japan expanded a credit program from 50 trillion yen to 55 trillion yen ($725 billion).
Hong Kong’s Hang Seng Index jumped 11 percent this week, exiting a so-called bear market after climbing more than 20 percent from a two-year low reached on Oct. 4. The Shanghai Composite Index gained 6.7 percent after a report China’s manufacturing may expand for the first time in four months. South Korea’s Kospi Index rose 5 percent, while Singapore’s Straits Times Index advanced 7.1 percent.
Australia’s S&P/ASX 200 gained 5.1 percent. The nation’s main bourse was shut four hours on Oct. 27 because of a network error, leaving traders unable to react to the breakthrough in Europe’s debt crisis as other markets in the region surged.
Esprit jumped 19 percent to HK$12.54, while Cosco Pacific Ltd. (1199), which has container facilities in Greece, also saw a 19 percent surge, climbing to HK$11.40 this week in Hong Kong. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender by market value, increased 5.4 percent to 353 yen in Tokyo.
Equities and commodities gained after 10 hours of talks by European leaders ended in Brussels with governments boosting a rescue fund to 1 trillion euros ($1.4 trillion) and bondholders agreeing to 50 percent losses on Greek debt. There was also accord on recapitalization of European banks and a potentially bigger role for the International Monetary Fund in strengthening the bailout fund.
James Hardie jumped 11 percent to A$6.31 in Sydney. Honda Motor Co., a carmaker that gets more than 80 percent of sales overseas, gained 8.9 percent to 2,498 yen in Tokyo.
In the U.S., growth accelerated to a 2.5 percent annualized rate in the third quarter, up from 1.3 percent in the previous three months. Household purchases, the biggest contributor to the economy, increased at a higher-than-projected 2.4 percent pace. Orders for U.S. durable goods excluding transportation equipment rose in September by the most in six months, showing manufacturing is supporting the expansion.
Energy and material companies had the biggest gains among the MSCI Asia Pacific Index’s 10 industry groups. Mitsubishi surged 12 percent to 1,659 yen in Tokyo. Jiangxi Copper Co., China’s No. 1 producer of the metal, soared 32 percent to HK$20.05 in Hong Kong. Rio Tinto Group, the world’s second- largest miner by sales, gained 12 percent to A$70.22 in Sydney.
The London Metal Exchange Index of prices for six metals, including copper and aluminum surged 10.5 percent. Copper for three-month delivery surged 0.4 percent. It was headed for its biggest weekly gain since 1986 before paring its advance yesterday.
CSR surged 59 percent to HK$5.23, while China Railway Group Ltd. (601390), a builder of the nation’s railroads, jumped 44 percent in Hong Kong, after UBS AG said China may begin to ease measures designed to cool inflation. The two stocks were the steepest gainers in the MSCI Asia Pacific Index this week.
UBS raised its rating on construction, machinery and shipping stocks to “neutral” from “underweight” after Premier Wen Jiabao suggested in his latest policy speech that the government may begin to ease fiscal-tightening policies that have curbed capital investments.
China Resources Land Ltd. (1109), a state-controlled developer, gained 31 percent to HK$12.20 this week, while Industrial & Commercial Bank of China (601398) Ltd., the nation’s biggest lender, increased 21 percent to HK$5.02.
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