Bloomberg News

Asian Stocks Rise as Easing Greek Concern Boosts Recovery Hopes

June 21, 2011

June 21 (Bloomberg) -- Asian stocks rose for the first day in five as concern eased that Greece will default after Luxembourg’s Jean-Claude Juncker, leader of euro-area finance ministers, indicated a solution to the crisis will be found.

BHP Billiton Ltd., the world’s biggest mining company with almost a fifth of its sales in Europe, climbed 1.6 percent in Sydney as crude prices advanced. Nissan Motor Co., the No. 2 Japanese seller of cars in Europe behind Toyota Motor Corp. in May, rose 3.1 percent after the yen depreciated. Foster’s Group Ltd., Australia’s biggest brewer, jumped 13 percent in Sydney after rejecting a takeover offer.

The MSCI Asia Pacific Index rose 1.3 percent to 130.6 as of 4:42 p.m. in Tokyo, set for its biggest increase since May 31, with almost four times as many stocks advancing as declining. Close to $750 billion has been wiped off the market value of the gauge since its high for the year on May 2 through yesterday.

“The whole market is oversold and hence the bounce on a hint that one of the issues weighing on the market may be close to a resolution,” said Prasad Patkar, who helps manage about $1.7 billion at Platypus Asset Management Ltd. in Sydney. “Greece is arguably the biggest of these issues because of its ability to cause severe damage to markets.”

‘Undervalued’ Banks

The Asia-Pacific index lost 1.9 percent last week, completing its seventh straight decline, the longest such run since 2004. Stocks in the Asian benchmark were valued at 13.2 times estimated earnings on June 16, the lowest since April 20, according to data compiled by Bloomberg.

Japan’s Nikkei 225 Stock Average gained 1.1 percent. Australia’s S&P/ASX 200 Index added 1.3 percent and Hong Kong’s Hang Seng Index rose 1.2 percent.

South Korea’s Kospi Index gained 1.4 percent, paced by lenders after Daewoo Securities Co. said in a report today that loan growth in the nation may improve in the second half and that bank stocks were “undervalued.”

Futures on the Standard & Poor’s 500 Index gained 0.5 percent today. In New York yesterday, the index advanced 0.5 percent to 1,278.36.

Juncker, head of the euro-region finance ministers group, said yesterday Greek Prime Minister George Papandreou assured him the government would do everything necessary to ensure delivery of financial aid from the European Union and International Monetary Fund.

Austerity Measures

Papandreou faces a confidence vote in his parliament today that may determine whether Greece becomes the first euro-area country to default. European Union leaders have insisted Greece secure multi-party support for austerity measures that are a condition of the aid needed to avoid default as soon as next month.

“Greece will be supported by European nations in the end,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “We’re going to avoid a worst-case scenario.”

BHP Billiton climbed 1.6 percent to A$42 in Sydney. Rio Tinto Group, a mining company that gets about 14 percent of its revenue from Europe, gained 1.7 percent to A$78.64. PetroChina Co., the mainland’s biggest oil producer, advanced 1.8 percent in to HK$11.08 in Hong Kong.

Crude oil for July delivery increased 0.3 percent to settle in New York yesterday, and rose as much as 1.1 percent today before paring gains ahead of the confidence vote in Greece and a two-day meeting of the U.S. Federal Reserve that begins today in Washington.

QE2 Exit

The Fed has said it will complete $600 billion in bond purchases, known as QE2 for the second round of quantitative easing, by the end of this month. More than three quarters of 58 economists surveyed by Bloomberg expect Chairman Ben S. Bernanke to keep the Fed balance sheet at current levels until October or later, compared with about half who held that view before the Fed’s last policy meeting in April.

Honda Motor Co., the world’s fourth-largest automaker by market value, advanced 1.1 percent to 2,928 yen in Tokyo after the weakening yen boosted Japanese exporters’ earnings prospects. Toyota, the world’s No. 1 carmaker, gained 0.9 percent to 3,205 yen. Nissan gained 3.1 percent to 820 yen after Daiwa Securities Capital markets raised the rating on the company’s stock to “buy.”

TDK Corp., an electronics manufacturer that gets about 15 percent of its revenue from Europe, gained 3.3 percent to 4,485 yen.

The yen depreciated to 115.08 against the euro, after reaching 115.35, the least since June 16, and compared with 114.80 in New York yesterday. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.

Relative Valuations

The MSCI Asia Pacific Index lost 6.4 percent this year through yesterday, compared with a gain of 1.7 percent by the S&P 500 and a drop of 3.6 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.2 times estimated earnings on average, compared with 12.8 times for the S&P 500 and 10.7 times for the Stoxx 600.

Foster’s jumped 13 percent to A$5.14 in Sydney. Australia’s biggest brewer rejected an unsolicited A$9.5 billion ($10 billion) conditional cash takeover offer from SABMiller Plc as too low.

The non-binding approach, at A$4.90 a share, “significantly undervalues” the company for a change of control, and Foster’s won’t take further action on it, the Melbourne-based brewer said in a statement. The offer is 8.2 percent higher than yesterday’s closing price.

Korean Banks

In Seoul, KB Financial Group Inc., owner of South Korea’s largest bank, rose 5.4 percent to 51,000 won after Daewoo Securities said loan growth will improve. Shinhan Financial Group Co. added 4.4 percent to 50,800 won. Industrial Bank of Korea, which lends to small-and medium-sized companies, advanced 4.3 percent to 20,550 won.

Hanjin Heavy Industries & Construction Co., a shipyard, climbed 4.7 percent to 30,250 won after Daewoo raised the stock to “buy” from “trading buy,” saying earnings and orders were likely to improve in the second half.

Among other stocks that advanced today, Aeon Co. jumped 3.8 percent to 931 yen in Tokyo after the Nikkei newspaper said profit for the retailer increased by 30 percent in the three months through May.

Kubota Corp., a maker of farm equipment that delayed earnings forecasts because of damage from Japan’s worst earthquake in March, advanced 2.9 percent to 681 yen after saying full-year net income will rise 9.4 percent.

In Hong Kong, Hengan International Group Co., a manufacturer of personal hygiene products, climbed 1.8 percent to HK$69.10 after Yuanta Financial Holding Co. rated the stock “buy” in new coverage.

--With assistance from Akiko Ikeda and Toshiro Hasegawa in Tokyo. Editors: Jason Clenfield, Nick Gentle.

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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