Asia Stocks Pare Monthly Loss on Valuations, Euro Crisis Meeting
Asian stocks (MXAP) rose, sending the region’s benchmark index toward its biggest two-day gain in a month, as valuations rebound from near a two-year low ahead of a meeting by European finance ministers seeking a resolution to the debt crisis.
The MSCI Asia Pacific Index gained 2 percent to 113.3 as of 8:21 p.m. in Tokyo, set for its biggest two-day gain since Oct. 28. All 10 industry groups on the measure rose, with almost five stocks advancing for each that fell. The Asian gauge is headed for a 7 percent decline for the month and last week traded at 1.19 times estimated book value, near a two-year low of 1.11 times the value of estimated net assets struck on Oct. 5.
“We are buying Asian equities,” David Gaud, a Hong Kong- based senior portfolio manager at Edmond de Rothschild Asset Management, said on Bloomberg Television. “When I look at the valuation of the market, a lot has been priced in already. Europe has the financial means to respond to this crisis.”
Hyundai Motor Co. (005380), South Korea’s largest maker of automobiles, rose 3.6 percent in Seoul. Esprit Holdings Ltd. (330), a clothier that gets most of its revenue from Europe, rose 4.6 percent in Hong Kong. Taisho Pharmaceutical Holdings Co., a pharmaceuticals-products maker, jumped 9.3 percent after saying it plans to buy back some of its shares.
Japan’s Nikkei 225 Stock Average rose 2.3 percent even as the nation’s jobless rate rose for the first time in three months. Australia’s S&P/ASX 200 index increased 1.1 percent, after falling as much as 0.4 percent. South Korea’s Kospi Index advanced 2.3 percent. Hong Kong’s Hang Seng Index advanced 1.2 percent.
Finance ministers from the 17-member monetary union meet in Brussels today to thrash out details on how the European Financial Stability Facility will boost its muscle by insuring sovereign debt with guarantees. Leaders are working toward a Dec. 9 summit meeting to regain investor confidence.
Hyundai Motor gained 3.6 percent to 216,500 won in Seoul. Esprit increased 4.6 percent to HK$10.52 in Hong Kong, while Nintendo Co., a maker of video-game players that gets 34 percent of its sales in Europe, advanced 2.3 percent in Osaka.
The MSCI Asia Pacific Index declined 19 percent this year through yesterday, compared with a 5.2 percent drop by the Standard & Poor’s 500 Index and a 17 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.3 times estimated earnings on average, compared with 12 times for the S&P 500 and 10 times for the Stoxx 600.
‘Joy And Sorrow’
In Europe, German newspaper Welt am Sonntag reported German Chancellor Angela Merkel and French President Nicolas Sarkozy are discussing an agreement under which member states will commit to tighter budget discipline without waiting for treaty changes. The newspaper didn’t say where it got the information.
“Investors are likely to buy shares even on small news because stocks have been sold too much globally on lingering debt issues in European countries,” said Seiichiro Iwamoto, who helps oversee about $35 billion in Tokyo at Mizuho Asset Management Co. “People in the market are swinging between joy and sorrow on even the smallest news from the region.”
Futures on the Standard & Poor’s 500 Index (SPXL1) climbed 1 percent today after swinging between gains and losses. The U.S. equity benchmark yesterday climbed 2.9 percent, the most since Oct. 27.
Fitch Ratings lowered its outlook on the U.S. to negative following a congressional committee’s failure to agree on deficit cuts.
Taisho Pharmaceutical jumped 9.3 percent to 5,120 yen in Tokyo after saying it plans to buy back as much as 3.38 percent of its outstanding shares.
Daido Steel Co., a Japanese maker of steel products, jumped 8.3 percent to 497 yen in Tokyo after signing a joint venture with U.S.-based Molycorp Inc., a producer of rare-earth products.
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