Asia Stocks Equal Record Win Streak as China Pledges Help on Europe Crisis
Asian stocks rose this week, with the MSCI Asia Pacific Index equaling its longest streak of advances, as China pledged to do more to help Europe cope with the debt crisis and Japan boosted asset purchases.
Cosco Pacific Ltd. (1199), the Hong Kong-listed operator of Greece’s Piraeus port, climbed 4.1 percent. Chipmakers outside Japan rallied after debt-laden Elpida Memory Inc. said it may not survive. Reliance Power Ltd. jumped 19.7 percent, leading Indian companies higher. Billabong International Ltd. (BBG), an Australian surfwear maker, jumped 42 percent after receiving a takeover bid from TPG Capital.
The MSCI Asia Pacific Index gained 1.7 percent to 126.95 this week, extending its winning streak to the longest since December 2005. The gauge has advanced for nine consecutive weeks only three previous times since 1988.
“It’s a distinct improvement from the fourth quarter last year from the perspective of investor confidence and risk appetite,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “The European news flow still seems to be determining the direction of the markets. So, when there’s a bit of relief from the European front, the markets can focus on fundamentals, which seem to be improving by the day.”
Japan’s Nikkei 225 Stock Average rose 4.9 percent, heading for the biggest weekly gain since Dec. 2, as the yen fell against all of its 16 major counterparts. A weaker yen boosts the earnings of Japanese exporters overseas when repatriated. The Bank of Japan surprised the market on Feb. 14, when it expanded its government bond purchases.
Australia’s S&P/ASX 200 fell 1.2 percent, and South Korea’s Kospi Index advanced 1.5 percent. Hong Kong’s Hang Seng Index advanced 3.4 percent. India’s BSE Sensitive Index climbed 3.1 percent.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, trailed major regional gauges as slumping foreign direct investment and trade data pointed to further weakness in the world’s second-largest economy.
“The fundamentals of the economy aren’t good and monetary policy will still be kept relatively tight this year,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages about $120 million. “But investors anticipate the government will have measures to support equities. Stocks will be volatile for the moment.”
Asian stocks extended gains as People’s Bank of China Governor Zhou Xiaochuan said on Feb. 15 that China is ready to be more involved in resolving the European crisis through the European Financial Stability Facility and European Stability Mechanism. Premier Wen Jiabao said on Feb. 14 that the nation is willing to get “more deeply” involved.
Financial companies gained amid optimism Europe’s debt crisis won’t throw the global financial system into disarray.
Germany, the biggest country contributor to euro-area rescues, signaled yesterday that finance ministers may be ready to back Greece’s second bailout in two years when they meet Feb. 20 in Brussels.
“The sense of worry is weakening slightly in markets across the board,” said Hisakazu Amano, who helps oversee the equivalent of $29 billion at T&D Asset Management Co. in Tokyo. “Expectations for a U.S. economic recovery are increasing and the uncertainties on the European debt issues are subsiding.”
Mitsubishi UFJ Financial Group advanced 5.5 percent to 406 yen. Nomura Holdings Inc. (8604), Japan’s biggest brokerage by market value, rose 10 percent to 345 yen. HSBC Holdings Plc (HSBA), Europe’s No. 1 lender, climbed 2 percent to HK$70.50.
Cosco Pacific rose 4.1 percent to HK$12.60. Esprit Holdings Ltd. (330), a clothier that gets more than 80 percent of revenue from Europe, climbed 5 percent to HK$15.02. Canon Inc. (7751), the Japanese camera maker for whom Europe is the biggest market by sales, added 4 percent.
Elpida touched its lowest price since listing in November 2004. The chipmaker slumped 16 percent to 310 yen after saying it sees “uncertainty” over remaining in business because it hasn’t secured financing. The company, which reported 311.7 billion yen ($3.97 billion) revenue in the 12 months to Dec. 31, has 210.8 billion yen of debt maturing this year, according to data compiled by Bloomberg.
Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, rose 11 percent to 1.176 million won. Samsung may separate its liquid-crystal-display business, the Electronics Times reported Feb. 15. Hynix Semiconductor Inc., a maker of semiconductors such as dynamic random access memory, gained 6.9 percent to 28,850 won.
Billabong Buyout Bid
Billabong International jumped 42 percent to A$2.62 after it received a takeover approach from buyout firm TPG Capital valuing the company at A$765 million ($825 million). The approach comes less than two months after the company started a review of its capital structure amid a slump in earnings and looming debt payments.
Reliance Power Ltd. (RPWR), the Indian utility controlled by billionaire Anil Ambani, led a rally among power and related companies this week on the MSCI Asia Pacific Index (MXAP) after Prime Minister Manmohan Singh ordered additional supplies of coal to the nation’s utilities.
Reliance Power rallied 19.7 percent this week, boosted by a 42 percent increase in third-quarter profit, the company said on Feb. 13.
The government ordered Coal India Ltd., the world’s largest producer of the commodity, on Feb. 15 to sign agreements to supply power projects due to be completed by March 2015 and import the fuel to overcome a shortfall in local production, failing which it needs to pay fines. The move is expected to ease a shortage of coal for generation plants.
Indian Companies Surge
Bharat Heavy Electricals Ltd. (BHEL), the biggest power-equipment maker, jumped 16.5 percent to 303.55 this week, the second-best performer on the MSCI Asia Pacific Index.
Axis Bank Ltd. (AXSB), India’s fourth-largest lender by market value, soared 14.3 percent this week. Reliance Communications Ltd. (RCOM), the nation’s second-largest mobile-phone operator, climbed 10.7 percent.
The MSCI Asia Pacific Index gained 11.5 percent this year through yesterday, compared with an 8.2 percent advance by the S&P 500 and an 8.8 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14.5 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.99 times for the Stoxx 600.
More than half of the companies listed in the Asia Pacific index that have reported earnings since Jan. 9 missed analysts’ estimates, according to data compiled by Bloomberg.
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