Bloomberg News

Asian Stocks Rise a Second Day as Greece Vote Boosts Optimism

June 22, 2011

June 22 (Bloomberg) -- Asian stocks rose, driving the region’s key index up for a second day, as Greek Prime Minister George Papandreou won a parliamentary confidence vote, moving the country a step closer to avoiding a default on its debt.

Sony Corp., Japan’s largest exporter of consumer electronics, and Korea’s Samsung Electronics Co., both of which get at least 20 percent of sales from Europe, advanced. BHP Billiton Ltd., the world’s No. 1 mining company, gained 1.1 percent in Sydney as metal prices rose. Paladin Energy Ltd., a uranium producer, surged 5.2 percent on takeover speculation. Li & Fung Ltd. jumped 5.6 percent in Hong Kong on optimism sales will accelerate.

“The progress over the past few days on Greece has been welcome,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “We’re still a long way from a resolution of this issue, and I suspect further volatility and uncertainty lies ahead. Investors therefore remain cautious and conservative.”

The MSCI Asia Pacific Index rose 0.8 percent to 131.78 as of 8:31 p.m. in Tokyo, extending a 1.4 percent advance yesterday after Luxembourg’s Jean-Claude Juncker, leader of euro-area finance ministers, indicated a solution to the crisis will be found. Today, most than twice as many stocks rose as fell on the gauge, even as police in Greece used tear gas to disperse crowds protesting against Papandreou’s budget cuts.

Debt Concern Ebbs

Japan’s Nikkei 225 Stock Average gained 1.8 percent. Australia’s S&P/ASX 200 Index added 0.5 percent. South Korea’s Kospi Index advanced 0.8 percent. Hong Kong’s Hang Seng Index was little changed.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent today. The index rose 1.3 percent yesterday in New York as concern about Greece’s debt crisis eased. Shares advanced even after a report showed sales of existing U.S. homes fell in May to the lowest level in six months.

“The Greek vote of confidence and Juncker’s comments to investors has helped a lot,” said James Holt, Sydney-based director of BlackRock Investment Management (Australia) Ltd., which oversees about $40 billion in assets. “The softer U.S. data is mostly being interpreted as a mid-cycle slowdown at this stage.”

Sony, Samsung

Sony advanced 3.7 percent to 2,012 yen in Tokyo, while Samsung climbed 1.5 percent to 826,000 won in Seoul. Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, advanced 1.5 percent to HK$13.80. Hanjin Shipping Co., an international shipping line, climbed 8.6 percent to 22,800 won in Seoul.

In Athens, 155 lawmakers in the 300-seat parliament supported the confidence motion, with 143 voting against, Speaker Filippos Petsalnikos said in remarks carried live on state-run Vouli TV. Attention now turns to whether Papandreou can push through parliamentary approval next week of a 78 billion-euro ($112 billion) package of budget cuts to stave off the threat of default.

European finance ministers said this week they would hold off on approving a 12 billion-euro payment to the country promised for July until passage of plans to cut the deficit, sell state assets and impose a “crisis levy” on wages.

“Greece is one step closer to getting additional loans, Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. in Tokyo, said after Papandreou survived the confidence vote. “That helps ease concern about Europe’s debt crisis.”

‘Very Oversold’

The MSCI Asia Pacific Index lost 5.1 percent this year through yesterday, compared with a gain of 3 percent by the S&P 500 and a drop of 2.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.3 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.9 times for the Stoxx 600.

“The news out of Greece is good for a bounce in markets, particularly as they are very oversold,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages about $98 billion in Sydney. “There is still a lot of water to go under the bridge before Greece gets a new bailout package, and uncertainty still remains about the strength of the global economic recovery. It could remain a volatile ride for a while yet.”

Takeover Speculation

BHP Billiton gained 1.1 percent to A$42.46 in Sydney after the London Metal Exchange Index of prices for six metals including copper and aluminum rose 0.9 percent yesterday. Rio Tinto Group, the world’s second-largest mining company by sales, advanced 1.5 percent to A$79.79.

Paladin Energy surged 5.2 percent to A$2.41 in Sydney today. The company’s declining share price makes it vulnerable to a potential takeover, Citigroup Inc. analysts said in a note to clients.

Paladin’s shares have tumbled almost 50 percent since March 11, when Japan’s worst earthquake triggered a nuclear crisis that raised concerns about the prospects for global uranium demand.

“There are few procuring uranium assets globally of Paladin’s size and we believe such assets could be attractive to Chinese, Russian, Indian and South Korean producers and utilities seeking long-term uranium supply,” the Citigroup analysts said.

Li & Fung

Li & Fung Ltd., the biggest supplier of clothes and toys to retailers, gained 5.6 percent to HK$15.58 in Hong Kong. Dow Famulak, an executive from the division that handles sourcing for Wal-Mart Stores Inc., told an analyst conference that it has an “addressable business” of as much as $100 billion.

Li & Fung signed a supply agreement with Wal-Mart last year in a deal that may contribute $2 billion in revenue this year, Chief Executive Officer Bruce Rockowitz has said.

“We’re just getting started,” Famulak said on a briefing broadcast on the company’s website today. Separately, the company said it acquired five companies to expand its trading and distribution businesses.

Also in Hong Kong, Hang Lung Properties Ltd., with more than 40 percent of its assets in commercial properties in the mainland, increased 2.8 percent to HK$30.75 after Standard Chartered Plc boosted its rating on the stock to “outperform” from “inline.”

“We believe Hang Lung’s strategy in China remains relatively immune from government property-cooling measures due to its commercial subsector focus,” Hong Kong-based analyst John Chan wrote in a report today.

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

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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