Bloomberg News

Asian Stocks Rise on Speculation Greece Near Debt Rollover Deal

June 28, 2011

June 28 (Bloomberg) -- Asian stocks rose, with the regional benchmark index paring its loss for the month, on speculation Greece may be allowed to roll over some of its bonds, easing concern the nation’s sovereign debt crisis will spread across Europe, one of Asia’s biggest export markets.

Esprit Holdings Ltd., the Hong Kong-based clothier that gets most of its revenue from Europe, rose 1.7 percent. Standard Chartered Plc, the U.K.’s third-largest bank by market value, gained 2.1 percent in Hong Kong after the London-based lender said it may post a “double-digit” growth in pretax profit in the second half. J. Front Retailing Co. led a rally in Japanese department store operators after a report showed the nation’s retail sales fell at a slower pace than economists estimated in May.

“Investors are becoming more optimistic,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities “There’s a sense that Europe is cooperating to avoid a worst case scenario.”

The MSCI Asia Pacific Index rose 0.3 percent to 131.16 as of 7:22 p.m. in Tokyo, with three stocks rising for every two that dropped. The gauge tumbled 7.1 percent from this year’s May 2 high through yesterday amid mounting concern that a slowing U.S. economy, Europe’s sovereign debt crisis and China’s steps to curb inflation will crimp earnings.

Recent stock declines were arrested amid signs that Greek policymakers and creditors may be headed toward a rollover agreement involving 70 percent of their maturing bonds to prevent a default. Lawmakers in Greece are due to vote on a five-year austerity plan this week that must pass for the country to secure aid from Europe and the International Monetary fund to cover 6.6 billion euros ($9.4 billion) of debt in August.

‘Extended Window’

“This gives Greece an extended window of opportunity to push the through meaningful structural change,” said Angus Gluskie, who manages about $350 million at White Funds Management Pty. in Sydney. “What may have been viewed as impossible within a short time frame, may be viewed as possible over a sequence of years.”

Japan’s Nikkei 225 Stock Average rose 0.7 percent, while Australia’s S&P/ASX 200 Index added 0.3 percent. Hong Kong’s Hang Seng Index gained 0.1 percent and China’s Shanghai Composite Index was little changed. South Korea’s Kospi Index decreased 0.4 percent.

Esprit climbed 1.7 percent to HK$23.45 in Hong Kong. Nintendo Co., the maker of Wii gaming consoles that gets 33 percent of sales from Europe, increased 2.9 percent to 14,940 yen in Tokyo. Mazda Motor Corp., the Japanese carmaker that gets 18 percent of sales from Europe, added 0.5 percent to 205 yen.

Standard Chartered, the U.K. bank that gets more than half of net revenue in the Asia Pacific, gained 2.1 percent to HK$194.50 in Hong Kong. The London-based lender said in a statement today it may post “double-digit” growth in first- half pretax profit after curbing expenses and income from markets including Hong Kong, Singapore and China increased.

Microsoft-led Rally

Futures on the Standard & Poor’s 500 Index retreated 0.2 percent today. The index advanced 0.9 percent yesterday in New York after regulators issued capital rules to safeguard the global financial system and Microsoft Corp. led a rally among technology companies.

Spending on information technology by companies and governments in the U.S. will grow 5.6 percent in 2011, according to a survey by International Data Corp., about double the estimated increase for gross domestic product. Of the executives surveyed by the research firm, 31 percent said spending on security initiatives was a top initiative this year, while 19 percent chose business analytics.

Powerchip Technology Corp., Taiwan’s biggest maker of computer memory chips by sales, surged 6.7 percent to NT$3.65 in Taipei. Smaller rival Nanya Technology Corp. gained 3.7 percent to NT$8.16. Taiwan Semiconductor Manufacturing Co., the world’s biggest contract maker of chips, added 0.7 percent to NT$72.5.

Japanese Retailers

Japanese department stores and clothing outlets advanced after a report showed the nation’s retail sales fell at a slower pace than economists estimated in May, adding to signs retailers may be recovering from the worst of the post-earthquake downturn in the world’s third-largest economy.

J. Front Retailing Co. climbed 4.5 percent to 350 yen. Takashimaya Co., Japan’s biggest department store operator by sales, rose 2.1 percent to 547 yen. Smaller rival Isetan Mitsukoshi Holdings Ltd. advanced 2.5 percent to 767 yen.

All but two of the 10 industry groups in the MSCI Asia Pacific Index advanced, led by healthcare, telecommunications services companies and industrial stocks such as robot-maker Fanuc Corp., which gets 75 percent of sales outside Japan and climbed 2.6 percent to 12,960 yen in Tokyo today.

Tokyo Steel Manufacturing Co. jumped 4 percent to 828 yen. Goldman Sachs Group Inc. raised the company’s investment rating to “buy” from “neutral,” citing an improving profit outlook as Japanese manufacturing recovers from the March 11 earthquake and ensuing nuclear disaster.

MSM Debut

The MSCI Asia Pacific Index lost 5 percent this year through yesterday, compared with a gain of 1.8 percent by the S&P 500 and a drop of 4.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.4 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.7 times for the Stoxx 600.

MSM Malaysia Holdings Bhd., the Southeast Asian nation’s biggest sugar refiner, surged 40 percent to 4.89 ringgit in Kuala Lumpur on its first day of trading.

Among stocks that declined, insurer AIA Group Ltd. lost 0.6 percent to HK$26.75 in Hong Kong after JPMorgan Chase & Co. said its parent, American International Group Inc., may face costs of about $500 million from U.S. storms in April and May.

Real estate companies in Hong Kong declined after mortgages drawn down from lenders fell for a second month in May. Kerry Properties Ltd., a Hong Kong-based builder controlled by the family of Malaysian billionaire Robert Kuok, fell 1.6 percent to HK$36.10. Hang Lung Properties Ltd., Hong Kong’s third-biggest develop by market value, fell 1 percent to HK$31.25.

--With assistance from Akiko Ikeda in Tokyo and Shani Raja in Sydney. Editor: Nick Gentle.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

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


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