Asian stocks jumped, driving the regional benchmark index toward a one-month high, after projected election victories for pro-bailout parties eased concern Greece would leave the euro. Shares pared gains after India’s central bank left interest rates unchanged.
Canon Inc. (7751), a camera maker that gets 31 percent of sales in Europe, rose 1.4 percent in Tokyo. Lynas Corp. surged 6.3 percent in Sydney after Malaysia upheld the Australian miner’s license to run a rare-earths refining facility in the face of protest. Hong Kong Exchanges & Clearing Ltd., the world’s second-largest bourse operator, slipped 4.5 percent after agreeing to pay 1.39 billion pounds ($2.18 billion) for the London Metal Exchange.
The MSCI Asia Pacific Index climbed 1.4 percent to 115.71 as of 7:26 p.m. in Tokyo, paring gains of as much as 1.8 percent. About four shares rose for each that fell in the gauge, which is heading for its highest close since May 15. Over $5 trillion has been erased from global equities since March amid concern growth is slowing in the U.S. and China, and as Europe’s debt crisis intensified.
“There’s a short-term sigh of relief,” said Belinda Allen, senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “It removes the tail risk event that we were concerned about in terms of Greece leaving the European Union immediately. We all know there’s still a long and hard road ahead for Greece and the problems of Europe aren’t solved by this election.”
Japan’s Nikkei 225 Stock Average (NKY) and South Korea’s Kospi Index advanced 1.8 percent. Australia’s S&P/ASX 200 Index rose 2 percent. Hong Kong’s Hang Seng Index increased 1 percent, while China’s Shanghai Composite Index added 0.4 percent.
The Sensex dropped 1.4 percent in Mumbai, erasing gains of as much as 0.9 percent, after India left interest rates unchanged at 8 percent, citing inflation. Only four of 25 economists in a Bloomberg News survey predicted the outcome, with 19 expecting a quarter-point cut. DLF Ltd., an Indian real estate company, led declines, falling 4.8 percent.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent, reversing earlier gains of as much as 0.7 percent.
Asian stocks rose after Greece’s pro-bailout New Democracy and Pasok parties took a majority in the 300-member parliament, according to the official projection by the Interior Ministry in Athens. The results eased concern that Alex Tsipras’s Syriza party would take control of the Greek government and reject austerity measures needed to qualify for international aid.
“Greece’s election is a good result and will provide some short-term relief,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “This will put to rest for a little while the prospect of Greece leaving the euro.”
Companies that do business in Europe advanced. Canon rose 1.4 percent to 3,240 yen in Tokyo. Hutchison Whampoa Ltd., which operates ports in Spain and Germany, added 1.6 percent to HK$66.85 in Hong Kong. HSBC Holdings Plc (5), Europe’s largest lender by market value, increased 1 percent to HK$67.45.
Europe’s debt crisis has spurred the three biggest declines in global equities since March 2009. The MSCI All-Country World Index (MXWD) tumbled 16 percent between April and July 2010 as Greek borrowing costs surged to record even after the International Monetary Fund approved a bailout package.
The measure fell 24 percent from May through October 2011 as Greece struggled to strike a deal with creditors on debt writedowns. The gauge declined 9.3 percent from the 2012 peak as a backlash against budget cuts stoked concern Greece would exit the euro as the crisis spread to Spain.
Lynas, the mining company building the world’s largest rare-earths refinery in Malaysia, jumped 6.3 percent to 93.5 Australian cents. Malaysia’s minister of innovation, science and technology on June 15 rejected an appeal by local residents against the company’s temporary operating permit, while imposing extra conditions on the plant.
Raw-material producers led the gains among the 10 industry groups in the MSCI Asia Pacific Index (MXAP) as oil and copper futures advanced. BHP Billiton Ltd. (BHP), the world’s biggest mining company, climbed 2.5 percent to A$32.64 in Sydney. Jiangxi Copper Co., China’s No. 1 producer of the metal, rose 2.1 percent to HK$17.44 in Hong Kong. Cnooc Ltd., China’s largest offshore oil producer increased 2.1 percent to HK$15.52.
The MSCI Asia-Pacific Index, which lost 11 percent from this year’s highest level in February through June 15, is trading at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
Among stocks that fell, Hong Kong Exchanges dropped 4.5 percent to HK$107.40. The bourse’s bid for the London Metal Exchange is “extremely expensive,” according to a client note from Morgan Stanley written by Anil Agarwal and Isabella He.
The offer of 107.6 pounds a share, or 180 times LME’s 2011 net income, requires approvals from LME’s shareholders and the U.K. Financial Services Authority. The most expensive bourse merger over $1 billion doesn’t need shareholder approval in Hong Kong.
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