Asia Stocks Rise as Germany, China Vow to Spur Growth
Asian stocks rose for a second day on speculation China and Europe will do more to bolster economic growth, boosting the outlook for the region’s exporters.
LG Electronics Inc. (066570), a South Korean electronics maker that depends on Europe for 16 percent of its sales, rose 7.6 percent. Guangzhou R&F Properties Co. led Chinese developers higher as a leading index rose and after a report the country will speed infrastructure investment. Woori Finance Holdings Co. jumped 6.5 percent in Seoul as South Korea’s top financial regulator said the government needs to cut its stake in the company.
The MSCI Asia Pacific Index gained 1 percent to 113.85 as of 7:10 p.m. in Tokyo, with more than three stocks rising for each that fell. The measure, which hit a five-month low on May 18, has risen the last two days after Premier Wen Jiabao said over the weekend that China will focus more on spurring economic growth.
“Obviously the markets were extremely weak last week, this is just a little bit of a relief rally given the situation in Europe hasn’t deteriorated further,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “In the absence of more bad news out of Europe, pro- growth comments out of China are supporting the markets.”
Asian stocks pared gains after Japan’s sovereign-credit rating was cut by Fitch Ratings, which cited the nation’s “liesurely” efforts to tackle the world’s public debt burden. The downgrade was announced after close of market in Japan.
The Asia-Pacific gauge dropped 13 percent from this year’s high on Feb. 29 through May 18 amid concern China’s growth is losing momentum and as the political impasse in Greece revived fears the nation will abandon bailout conditions and exit the euro zone. The 14-day relative strength index on the measure has been below 30, a threshold that some traders think signal a rebound is due, for the last eight trading days.
Japan’s Nikkei 225 Stock Average rose 1.1 percent as the Bank of Japan started a two-day policy meeting today. Australia’s S&P/ASX 200 added 1.2 percent. South Korea’s Kospi Index advanced 1.6 percent. Taiwan’s Taiex Index (TWSE) rose 1.2 percent even after the jobless rate unexpectedly climbed last month. Singapore’s Straits Times Index rose 1.3 percent.
Hong Kong’s Hang Seng Index (HSI) rose 0.6 percent. The Hang Seng China Enterprises Index (HSCEI) of Hong Kong-listed Chinese companies advanced 1.2 percent. The Shanghai Composite Index, which tracks the larger of China’s stock exchanges, rose 1.1 percent.
Futures on the Standard & Poor’s 500 Index fell 0.2 percent today after the gauge gained 1.6 percent yesterday, capping its biggest advance in two months.
Companies that do business in Europe advanced as German Finance Minister Wolfgang Schaeuble said the nation will consider all ideas on spurring euro area growth. Policy makers are preparing for the European Union summit tomorrow.
LG Electronics advanced 7.6 percent to 67,700 won in Seoul. Esprit Holdings Ltd. (330), a clothier that depends on Europe for 79 percent of its sales, rose 3.4 percent to HK$12.72 in Hong Kong. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, gained 1 percent to 1,119 yen in Tokyo.
Companies tied to China advanced. A leading index for the mainland increased 0.8 percent in April, the New York-based Conference Board said in an e-mailed statement today, citing a preliminary reading. That compares with a 0.8 percent gain in March and 1 percent in February.
Wen Jiabao’s government may announce stimulus measures in the near term, the official China Securities Journal said yesterday, a day after the premier pledged to focus more on bolstering growth. The newspaper reported today, citing an unidentified person, that the nation plans to speed up the approval of infrastructure construction projects to boost economic growth.
“We’ve turned quite a bit more optimistic on China in the last few months,” Arnout Van Rijn, chief investment officer for Robeco Groep NV’s Hong Kong division, said in a Bloomberg Television interview. The firm oversees $200 billion globally. “From here on you’ll get some better numbers” on the Chinese economy. “It’s quite safe to buy stocks.”
Chinese developers gained. Guangzhou R&F Properties added 6 percent to HK$9.68, and Renhe Commercial Holdings Co. (1387), a Chinese developer of shopping centers in disused bomb shelters, advanced 11 percent to 50 Hong Kong cents. The company has gained about 50 percent in the last four trading days.
Companies that sell to the world’s second-largest economy also advanced. Komatsu Ltd. (6301), a construction machinery maker that gets 14 percent of its revenue in China, rose 5.3 percent to 1,954 yen in Tokyo. Samsung Electronics Co. (005930), the South Korean consumer electronics company that gets 28 percent of revenue from China, climbed 2.6 percent to 1,240,000 won.
Among other stocks that rose, Woori Finance Holdings climbed 6.5 percent to 10,700 won. Kim Seok Dong, South Korea’s top financial regulator, said the government needs to cut its 57 percent stake in the company to recoup taxpayer money and keep its value from falling.
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