Asian Stocks Rise on Federal Reserve’s Rate Pledge; Mazda Rises
March 16, 2010, 11:03 PM EDTBy Masaki Kondo and Shani Raja
March 17 (Bloomberg) -- Asian stocks rose, driving the MSCI Asia Pacific Index to an eight-week high, as the U.S. Federal Reserve pledged to keep borrowing costs near zero for an “extended period.”
LG Electronics Inc., the world’s third-largest mobile-phone maker, gained 2.4 percent in Seoul. Mazda Motor Corp., which gets 21 percent of its sales in Europe, rose 3.4 percent as the euro strengthened after Standard & Poor’s affirmed Greece’s credit ratings. Taiwan Semiconductor Manufacturing Co. climbed 1.7 percent after Intel Corp.’s release of a new product stoked optimism demand for chips is improving. Mitsui Mining & Smelting Co. surged 5.4 percent after boosting its profit forecast and after commodity prices rose.
“It’s clear that the Fed is going to keep rates very accommodative to stimulate the growth recovery,” said Chris Hall, who helps manage about $3.3 billion at Argo Investments in Adelaide, Australia. “The million-dollar question is the consumer’s ability to step up to the plate to support the economy.”
The MSCI Asia Pacific Index rose 0.9 percent to 124.05 as of 11:59 a.m. in Tokyo, set to close at the highest level since Jan. 20. South Korea’s Kospi Index jumped 1 percent and Taiwan’s Taiex advanced 1.3 percent. The S&P/ASX 200 Index rose 0.7 percent in Sydney.
The Nikkei 225 Stock Average advanced 0.7 percent in Japan, where the central bank is scheduled to announce its latest policy decisions this afternoon. DeNA Co., a Japanese operator of shopping Web sites, soared 8.7 percent after raising its full-year earnings target.
Fed’s Decision
Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 0.8 percent yesterday to the highest close since October 2008 after the Fed’s rate comments. The Fed has kept the federal funds rate target for overnight loans between banks in a range of zero to 0.25 percent since December 2008. Policy makers began using the “extended period” language in March 2009 and have repeated it at each meeting since.
LG Electronics gained 2.4 percent to 107,000 won. Nissan Motor Co., which counts North America as its biggest market, climbed 1.6 percent to 767 yen in Tokyo. Funai Electric Co., which gets 68 percent of its revenue in North America, gained 1.3 percent to 4,030 yen in Osaka trading.
Mazda, the world’s only mass producer of rotary engines, climbed 3.4 percent to 247 yen after the yen depreciated to 124.56 per euro today from 123.38 at yesterday’s close of stock trading in Tokyo. A weaker yen boosts the value of overseas income when converted into the home currency.
Greece Concern
Nikon Corp. a camera maker that gets 25 percent of its sales in Europe, climbed 1.5 percent to 2,200 yen.
S&P affirmed Greece’s investment-grade BBB+ rating and dropped the country from “creditwatch negative,” saying the 4.8 billion euros ($6.6 billion) of budget cuts passed this month “were appropriate to achieve” the goal of reducing the European Union’s biggest deficit.
The MSCI Asia Pacific Index has gained 8.6 percent from a more-than-two-month low on Feb. 8 as better-than-estimated U.S. jobs data and a pledge of support from French President Nicolas Sarkozy for debt-stricken Greece bolstered confidence in the global recovery.
The stock rally has lifted the average price of shares in the MSCI Asia Pacific Index to 18.7 times estimated earnings, compared with 15 times for the MSCI World Index of 23 developed nations.
Computer Chips
Taiwan Semiconductor Manufacturing, the world’s largest maker of chips designed by other companies, jumped 1.7 percent to NT$60.7. Samsung Electronics Co., the largest memory-chip maker globally, advanced 2.1 percent to 781,000 won in Seoul. Elpida Memory Inc., Japan’s No. 1 maker of computer-memory chips, gained 1.9 percent to 1,781 yen after the Nikkei newspaper said the company may swing to an operating profit from a loss in the year to March 31.
Shares of Intel, the world’s largest semiconductor maker, surged 4 percent in New York yesterday after releasing a new line of server chips. The company has already shipped more than 100,000 units of its Xeon 5600, which officially went on sale yesterday.
Mitsui Mining soared 5.4 percent to 272 yen, poised for the biggest advance since Dec. 3. The company raised its net-income forecast by 44 percent for the year to March 31.
BHP Billiton Ltd., the world’s biggest mining company, rose 0.7 percent to A$43.05 in Sydney, and Rio Tinto Group, the No. 3 mining company, advanced 0.9 percent to A$76.18. Nippon Mining Holdings Inc. climbed 3 percent to 451 yen in Tokyo.
Commodities Demand
Crude oil futures rose 0.3 percent today after climbing 2.4 percent in New York yesterday, the biggest gain in four weeks. The London Metals Exchange Index of six metals, including copper and zinc, increased 1.3 percent yesterday.
“Expectations that interest rates will remain low in the U.S. are boosting demand for commodities,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo.
DeNA soared 8.7 percent to 686,000 yen and posted the biggest gain in the MSCI Asia Pacific Index. The company boosted its annual net-income projection by 24 percent yesterday.
--With assistance from Akiko Ikeda in Tokyo. Editors: Darren Boey, John McCluskey.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
