Asian Stocks Gain for Fourth Week on Fed Pledge, BOJ Lending
March 19, 2010, 5:57 PM EDTBy Kana Nishizawa and Shani Raja
March 20 (Bloomberg) -- Asian stocks rose for a fourth week after the U.S. Federal Reserve pledged to keep borrowing costs near zero for an “extended period” and as the Bank of Japan expanded a bank-loan program.
Sony Corp., which makes Bravia televisions and the PlayStation 3 video-game system, gained 4.1 percent. Sony Financial Holdings Inc., a subsidiary, surged 12 percent after saying it will boost bond holdings. Kia Motors Corp., South Korea’s No. 2 automaker, jumped 14 percent in Seoul on speculation profit will beat estimates. BYD Co., a Chinese carmaker, advanced 11 percent in Hong Kong after brokerages lifted earnings forecasts for the company.
“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 climbed 1.4 percent to 124.92 this week. Stocks have rallied in the past six weeks as concern over monetary tightening and Greece’s debt receded, and as companies reported better-than-expected earnings.
Japan’s Nikkei 225 Stock Average rose 0.7 percent this week, compared with increases of 1.1 percent for Australia’s S&P/ASX 200 Index, 1.4 percent for South Korea’s Kospi index and 0.8 percent for Hong Kong’s Hang Seng Index. The Shanghai Composite Index advanced 1.8 percent.
Economic Recovery
The MSCI Asia Pacific Index rose this week after the Federal Reserve said it will leave its benchmark interest rate near zero to safeguard the economic recovery. Separately, a U.S. Labor Department report showed first-time applications for jobless benefits dropped in the week ended March 13, while the Federal Reserve Bank of Philadelphia’s general economic index rose in March to the highest level this year.
Sony, which gets about a quarter of its revenue from the U.S., climbed 4.1 percent to 3,520 yen. Toyota Motor Corp., the world’s largest automaker, gained 3.6 percent to 3,600 yen. Mazda Motor Corp., which gets 21 percent of its sales in Europe, advanced 5.6 percent to 247 yen after Standard & Poor’s affirmed Greece’s credit ratings.
“The U.S. economy is improving day by day, and so is the global economy,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. “People are beginning to expect better corporate earnings.”
‘Stable Investments’
Sony Financial soared 12 percent to 290,900 yen after the company said it will make “stable investments” in bonds, replacing stocks and risky assets. Mitsui Mining & Smelting Co. advanced 7 percent to 274 yen after Japan’s biggest producer of refined zinc boosted its full-year net income forecast by 44 percent.
The Bank of Japan doubled a lending program on March 17, aimed at stoking credit growth after the government stepped up calls to arrest deflation that’s hampering the economic recovery. It also held the overnight lending rate at 0.1 percent.
“It’s good that the bank is showing its willingness to cooperate with the government to curb deflation,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion in Tokyo.
The MSCI Asia Pacific Index has gained about 9.5 percent from its lowest level in more than two months on Feb. 8, as better-than-estimated U.S. employment data and a pledge of support from French President Nicolas Sarkozy for debt-stricken Greece bolstered confidence in the global recovery. The average price of stocks in the index has risen to about 19 times estimated earnings from 18 at February’s low.
Production Capacity
Kia Motors rose 14 percent to 23,950 won in Seoul this week. The company’s first-quarter profit will feature “strong sales” and there may be an “earnings surprise,” according to Sohn Myung Woo, an analyst at Woori Investment & Securities Co. in Seoul. Separately, the company said it will add a 100 million-euro ($137 million) engine unit to its factory in Slovakia to boost production capacity in Europe.
BYD, backed by Warren Buffett, jumped 11 percent to HK$76.30 in Hong Kong. Morgan Stanley, BNP Paribas SA, Credit Suisse Group AG and JPMorgan Chase & Co. all increased profit forecasts for the company, which said March 14 that net income more than tripled in the year ended Dec. 31.
In Sydney, Telstra Corp., Australia’s largest phone company, climbed 3.6 percent to A$3.17 after a vote on legislation that may lead to a breakup of Australia’s former telephone monopoly was delayed in the nation’s Senate.
--With assistance from Masaki Kondo in Tokyo. Editors: Nicolas Johnson, Mike Millard.
To contact the reporter for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
To contact the editor responsible for this story: Nicolas Johnson in Tokyo at nicojohnson@bloomberg.net.
