Asia Stocks Gain on Optimism Europe Will Boost Efforts to Stem Debt Crisis
Asian stocks (MXAPJ) rose on speculation European leaders meeting this week in Brussels will step up efforts to fight the debt crisis and stave off lower national credit ratings that may make funding bailouts more costly.
Mitsui O.S.K. Lines Ltd., operator of the world’s largest merchant fleet, rose 11 percent in Tokyo after agreeing to form a supertanker pool. Cosco Pacific Ltd. (1199), which operates container facilities in Greece, advanced 3.5 percent in Hong Kong after Greek Prime Minister Lucas Papademos won parliamentary support for a plan to cut debt and keep the country in the euro. Tripod Technology Corp., a maker of circuit boards, rose 7 percent as a rival sought to price its initial public offering at a valuation higher than Tripod’s shares.
The MSCI Asia Pacific Index (MXAP) rose 1.4 percent to 118.24 as of 7:32 p.m. in Tokyo, set to gain for the seventh day in eight. All 10 industry groups on the measure gained, with about four stocks advancing for each that declined.
“I think the main announcement will be around the move towards a fiscal union and measures around that,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has about $100 billion under management. “Having a union on its own doesn’t do anything to stop the current crisis. But it provides credit confidence for the European Central Bank to step in and ultimately put Europe on to a path where investors can trust public debt markets in Europe. That confidence-effect translates to Asian share markets.”
Japan’s Nikkei 225 Stock Average (NKY) rose 1.7 percent. Australia’s S&P/ASX 200 index gained 0.7 percent after a report showed the nation’s economy grew more than estimated in the third quarter. South Korea’s Kospi Index advanced 0.9 percent. Hong Kong’s Hang Seng Index increased 1.6 percent.
The MSCI Asia Pacific Index declined 15 percent this year through yesterday, compared with a gain of 0.1 percent by the S&P 500 and a 12 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.8 times estimated earnings on average, compared with 12.7 times for the S&P 500 and 10.6 times for the Stoxx 600.
Cosco Pacific rose 3.5 percent to HK$9.41 in Hong Kong. Nissan Motor Co., which depends on Europe for 15 percent of its sales, gained 1.3 percent to 708 yen in Tokyo.
Futures on the Standard & Poor’s 500 Index (SPXL1) advanced 0.8 percent today. German Finance Minister Wolfgang Schaeuble said S&P’s move to place 15 euro nations, including Germany and France, on review for possible credit downgrades will help force European leaders to ratchet up efforts to resolve the debt crisis at their summit in Brussels on Dec. 8-9. The ratings company said cuts would depend on the meeting’s outcome.
A German-French push for closer economic ties in Europe won the backing of U.S. Treasury Secretary Timothy F. Geithner, who urged governments to work with central banks to erect a “stronger firewall” to end the debt crisis. The European Central Bank will probably cut its benchmark interest rate by a quarter point to 1 percent when policy makers meet, according to 58 economists in a Bloomberg survey.
Greek Prime Minister Papademos received parliamentary approval for a 2012 budget that aims to almost halve the deficit shortfall from a debt writedown and ensure Greece remains a member of the euro area.
“Investors’ eyes are now off Greece,” said Naoki Fujiwara, who helps oversee $6 billion at Shinkin Asset Management Co. in Tokyo. “Nonetheless, the fact that it’s now easier to pass measures amidst all the fiscal concern can be taken positively.”
Mitsui O.S.K Surges
Mitsui O.S.K. Lines surged 11 percent to 288 yen after saying it plans to form a pool of oil tankers with four other companies to cut costs. Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line by sales, gained 7.3 percent to 147 yen.
China Shipping Container Lines Co., the container arm of China Shipping (Group) Co., rose 11 percent to HK$1.70 after Chairman Li Shaode said there may be opportunities for acquisitions in the industry next year. China Cosco Holdings Co., a Chinese operator of container ships and terminals, gained 11 percent to HK$3.90 in Hong Kong, the biggest gain in the MSCI Asia Pacific Index.
Meiji Holdings Co., a Japanese dairy-products producer, gained 5.1 percent to 3,175 yen. The shares slid the most since March 15 yesterday after a Kyodo News report that radioactive cesium had been found in powdered milk. Meiji said the levels of contamination posed no risks to health.
Tripod Tech Gains
Tripod Technology (2317) gained 7 percent to NT$72.3 in Taipei. Rival Zhen Ding Technology Holding Ltd. sought to price its shares at about NT$60 and at a valuation of about 16 times this year’s estimated earnings, according to Eric Chang, spokesman for the company. Tripod is trading at 8.7 times estimated earnings, according to data compiled by Bloomberg.
Investors are favoring Tripod because Zhen Ding is aiming to price its shares at a “high price,” Birdy Lu, an analyst at Samsung Securities Co. said by phone from Hong Kong today.
Hyundai Development Co. (012630), a South Korean builder, rose 7.9 percent to 19,800 won in Seoul after the government said it will cut transfer taxes on owners of more than one house and will lower interest rates on loans for first-home buyers.
LG Chem Ltd. (051910), a chemical manufacturer, sank 5.6 percent to 328,500 won in Seoul and was the most actively traded stock by value in the MSCI Asia Pacific Index. Maeil Business Newspaper reported the company will spin off its battery business next year, citing an unnamed company official. LG Chem spokesman Owen Sung denied the report.
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