Asian Stocks Gain Second Week Amid Economic Stimulus Optimism

Asian stocks rose, with the regional benchmark index recording its biggest weekly gain in almost five months, on optimism that central banks from China to the U.S. will take new steps to fuel growth tempered concerns Europe’s debt crisis will worsen.

Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., jumped 5.9 percent this week in Hong Kong. Komatsu Ltd., a Japanese construction machinery maker that gets 14 percent of its revenue from China, gained 2.3 percent in Tokyo. DeNA Co., Japan’s biggest social-gaming operator, surged 23 percent on a plan to buy back as much as 10 percent of its stock.

The MSCI Asia Pacific Index rose 2.4 percent to 114.16 this week, the most in almost five months, before elections this weekend that may determine Greece’s future in the euro. The gauge has dropped more than 11 percent from its peak this year on Feb. 29 amid concern growth is slowing in China and the U.S. and as European policy makers failed to stem concern about the debt crisis.

“There’s quite a high chance that the U.S. may do more easing,” Terrace Chum, a Hong-Kong based fund manager at Manulife Asset Management, which oversees $220 billion. “People are expecting an interest-rate cut in China. There is expectation that Greece may not part from the European Union. But all these could turn around very quickly.”

Gains in stocks were limited on concern about Europe’s debt crisis. Spanish bond yields surged the most in four months as the government sought a bailout of 100 billion euros ($125 billion) for its banks. The nation’s credit rating was cut three steps to Baa3 by Moody’s Investors Service, which cited Spain’s increased debt burden, weakening economy and limited access to capital markets.

Stimulus Hopes

Companies linked to the U.S. advanced after data on June 14 showed more Americans applied for jobless benefits and consumer prices dropped by the most in three years, giving the Federal Reserve room to spur growth. A policy-setting meeting is scheduled June 19-20.

Li & Fung rallied 5.9 percent to HK$15.20 this week. Honda Motor Co. (7267), a Japanese carmaker that gets more than 40 percent of its sales in North America, gained 1.7 percent to 2,533 yen in Tokyo.

The Shanghai Composite Index (SHCOMP) increased 1.1 percent this week, after data showed China’s consumer prices increased the least in two years in May and industrial output and retail sales trailed estimates, adding pressure for more stimulus after the first interest-rate cut in three years.

Komatsu climbed 2.3 percent to 1,885 yen this week. Sino- Ocean Land Holdings Ltd. (3377), a real estate developer in China, surged 16 percent to HK$3.75.

DeNA, Gree

DeNA soared 23 percent to 1,993 yen this week after saying it will spend as much as 20 billion yen ($254 million) buying back up to 10 percent of its stock.

Gree Inc., DeNA’s closest domestic rival, also gained on hopes it may follow DeNA in buying back shares, said Mitsuo Shimizu, an analyst at Iwai Cosmo Securities Co. in Tokyo. Gree jumped 25 percent to 1,710 yen this week. The two stocks were the biggest gainers on the MSCI Asia Pacific Index (MXAP)’s 1,005 companies this week.

Japan’s Nikkei 225 Stock Average (NKY) climbed 1.3 percent this week, while South Korea’s Kospi Index rose 1.2 percent. Australia’s S&P/ASX 200 slid 0.2 percent.

Energy companies gained the most among the regional equity gauge’s 10 industry groups as crude oil for July delivery rose on OPEC’s call for members to cut production in excess of quotas. The Organization of Petroleum Exporting Countries needs to reduce output by 1.6 million barrels a day to comply with its targeted ceiling, Secretary General Abdalla El-Badri said.

PetroChina Co. (857), the nation’s largest oil company, advanced 4 percent to HK$10.52 this week in Hong Kong. SK Innovation Co., South Korea’s largest refiner, soared 11 percent to 149,000 won in Seoul.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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