Asian Stocks Gain Second Week on U.S. Deal Prospects
Asian stocks posted a second weekly gain, with the regional benchmark index rising to its highest level since May, as U.S. lawmakers looked closer to a deal to avert the so-called fiscal cliff and the frontrunner to be Japan’s next prime minister repeated calls for stimulus.
Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., rose 2.9 percent in Hong Kong. Nippon Sheet Glass Co., which depends on Europe for about 40 percent of its sales, gained 7 percent in Tokyo as the yen weakened against the euro. Hitachi Ltd. rose 5.1 percent in Tokyo after agreeing to merge thermal-power businesses with Mitsubishi Heavy Industries Ltd. CSL Ltd., Australia’s biggest drugmaker, jumped 9.2 percent after raising its profit growth forecast.
The MSCI Asia Pacific Index (MXAP) climbed 1.4 percent to 124.65 this week, extending November’s gain to 2.2 percent. The gauge rose more than 14 percent from this year’s low on June 4 as central banks from Europe, the U.S., Japan and China took steps to support economic growth.
“Market expectations are that the U.S. cutbacks will be watered down and spread over several years,” said Matthew Sherwood, head of markets research at Perpetual Investment, which manages about $25 billion. “If the cliff is successfully flattened out over several years, the U.S. recession feared by markets is unlikely to occur.”
Stocks on Asia’s benchmark index were valued at about 14.1 times estimated earnings on average yesterday, compared with about 13.6 for the Standard & Poor’s 500 Index and 12.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
South Korea’s Kospi (KOSPI) Index gained 1.1 percent. Singapore’s Straits Times Index added 2.8 percent. Hong Kong’s Hang Seng Index rose 0.5 percent and the Hang Seng China Enterprises Index of mainland companies rose 0.2 percent.
Japan’s Nikkei 225 Stock Average rose 0.9 percent, its third weekly advance. Japan’s cabinet yesterday approved an 880 billion yen ($10.7 billion) stimulus package to boost the economy before a general election on Dec. 16. The Nikkei has climbed 9 percent since Nov. 14, when elections were called that polls suggest will be won by an opposition part calling for more aggressive monetary easing.
“If the Bank of Japan is forced to become even looser, the yen will be potentially even weaker, and that’s relatively good news for exports,” Andrew Freris, chief investment adviser for Asia at BNP Paribas Wealth Management, told Bloomberg Television yesterday.
Nippon Sheet Glass gained 7 percent to 92 yen as the yen weakened to a seven-month low against the euro, boosting the earnings outlook for the exporter. Nissan Motor Co. (7201), which gets 16 percent of its sales in Europe, advanced 1.4 percent to 799 yen.
Republican House Speaker John Boehner said he was optimistic U.S. budget talks can avert more than $600 billion in automatic tax increases and spending cuts next year. The Congressional Budget Office has said a failure to avoid the fiscal cliff could lead to a recession.
Li & Fung, which counts the U.S. as its biggest market, advanced 2.9 percent to HK$12.76. BHP Billiton Ltd., the world’s biggest mining company, rose 1.9 percent to A$34.39 in Sydney.
In the fourth Greek crisis meeting in two weeks, euro- region finance ministers convinced a skeptical International Monetary Fund that Europe has a formula for rescuing the country that triggered the debt crisis. Greece was cleared to receive a 34.4 billion euro ($44.7 billion) loan installment in December.
Among other stocks that rose, Hitachi gained 5.1 percent to 476 yen this week, while Mitsubishi Heavy advanced 5.2 percent to 383 yen. The companies, among Japan’s largest industrial manufacturers, said on Nov. 29 that they would combine businesses making gas turbines, boilers and fuel cells. Mitsubishi will own 65 percent of the venture and Hitachi will hold the rest.
In Sydney, CSL jumped 9.2 percent to A$51.70. The company rose the most in more than four years on Nov. 27 after saying it expects profit growth of about 20 percent.
Among stocks that declined, Hulic Co. tumbled 17 percent to 551 yen in Tokyo after the Japanese real estate company said it plans to raise as much as 37 billion yen in a share sale.
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