Bloomberg News

Asian Stocks Gain for Third Week on Economy, Easing Europe Worry

July 08, 2011

July 9 (Bloomberg) -- Asian stocks rose for a third week as exporters and energy producers gained amid easing concern over Europe’s debt crisis and the U.S. economic slowdown and after China raised interest rates, boosting the outlook for the country’s insurers.

Sony Corp., Japan’s biggest exporter of consumer electronics, advanced 3.9 percent in Tokyo. Toyota Motor Corp., the world’s largest carmaker, rose 3.3 percent. HSBC Holdings Plc, Europe’s biggest lender by market value, gained 1.6 percent in Hong Kong. Ping An Insurance Co., China’s No. 2 insurer by market value, climbed 2.4 percent on speculation higher interest rates in the country will boost the company’s investment income.

“The Greek debt plans and better U.S. data have helped markets to recover from their downbeat mood,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “It’s increased the appetite for risk among investors looking for further signs of recovery in the global economy.”

The MSCI Asia Pacific Index rose 2.1 percent to 138.39, driving the regional benchmark index to its longest streak of weekly advance since April. The gauge extended its rally for a third week as European Union leaders hammer out details of proposals to rollover Greek debt to help prevent Greece from defaulting and after reports showed retail sales in the U.S. increased in June, employers hired more workers last month and claims for unemployment benefits declined.

Thai, Japan Stocks Rally

The Bangkok SET Index jumped 4.5 percent, the most among the region’s benchmark gauges, after Yingluck Shinawatra, the sister of an exiled former Thai leader, led the Pheu Thai party, in winning a majority seats in parliament, lessening the risk of a military intervention.

Japan’s Nikkei 225 Stock Average increased 2.7 percent to become the world’s best performing developed market benchmark index in the last month. South Korea’s Kospi Index climbed 2.6 percent and Australia’s S&P/ASX 200 Index added 1.4 percent. Hong Kong’s Hang Seng Index rose 1.5 percent and China’s Shanghai Composite Index gained 1.4 percent.

Global stocks also advanced as Greece moved closer to averting a default. Germany revived on July 6 a proposal for a debt swap to lengthen Greek bond maturities as Charles Dallara, managing director of the Institute of International Finance, recommended buybacks of outstanding Greek securities.

‘Changing Environment’

“The investment environment is changing as concerns ease about a U.S. economic slowdown and Greek debt,” said Takero Inaizumi, head of equity research in Tokyo at Mizuho Investors Securities Co.

Sony Corp., the maker of the PlayStation gaming consoles and Bravia televisions, gained 3.9 percent to 2,207 yen. Toyota, which gets 27 percent of sales from North America, rose 3.3 percent to 3,445 yen. Li & Fung Ltd., the world’s biggest supplier of clothes and toys to retailers including Wal-Mart Stores Inc., increased 4.4 percent to HK$14.82 in Hong Kong. Esprit Holdings Ltd., the Hong Kong-based clothier that counts Europe as its largest market, climbed 3.3 percent to HK$25.

HSBC Holdings advanced 1.6 percent to HK$78.25. Standard Chartered Plc, the U.K.’s third-biggest bank by market value, rose 2.2 percent.

China’s biggest insurers advanced on speculation earnings will be boosted after the central bank raised benchmark interest rates for the third time this year to tame inflation in the world’s fastest-growing major economy. Ping An gained 2.4 percent to HK$82.30. Bigger rival China Life Insurance Co. climbed 3.4 percent to HK$27.50.

‘Marked Cooling’

“We’ve seen a marked cooling in China’s growth recently and the next reading on inflation should mark a peak,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., which has almost $100 billion under management globally. “That suggests that we’re coming close to the end of China’s tightening cycle.”

China may limit interest-rate increases for the rest of this year as Premier Wen Jiabao bets that a slowing economy will help tame inflation. A quarter-point boost to one-year lending and deposit rates announced July 6 may be the last for 2011, according to JPMorgan Chase & Co., HSBC Holdings Plc and Bank of America Merrill Lynch.

China’s inflation rate accelerated to a three-year high of 6.4 percent in June, exceeding economists’ estimates and the government’s full-year target, a report from the statistics bureau said today. Consumer prices had risen 5.5 percent in May.

Oil, Metals

Raw material producers advanced after crude oil and metal futures gained for a second week. BHP Billiton Ltd., the world’s biggest mining company, increased 2.7 percent to A$44.95 in Sydney. Smaller rival Rio Tinto Group gained 1.8 percent to A$84.35. Cnooc Ltd., China’s largest offshore oil and gas producer, rose 1.9 percent to HK$18.50 in Hong Kong.

Tokyo Electric Power Co., the Japanese utility at the center of the worst nuclear crisis in 25 years, jumped 25 percent to 411 yen in Tokyo, the most among stocks in the MSCI Asia Pacific Index. The country’s Chief Cabinet Secretary Yukio Edano said he didn’t know anything about a possible government proposal to split up the power company and nationalize nuclear power operations.

Among stocks that fell, China Construction Bank Corp. and Bank of China Ltd. declined this week after Temasek Holdings Pte, Singapore’s state-owned investment company, said July 6 it raised HK$28.2 billion ($3.6 billion) selling stakes in the two Chinese lenders.

China Construction Bank, the nation’s second-biggest lender by market value, fell 2.3 percent and smaller rival Bank of China, dropped 1.6 percent to HK$3.73. Temasek sold about HK$9.4 billion of China Construction Bank’s shares and HK$18.8 billion of Bank of China stock.

--With assistance from Anna Kitanaka in Tokyo. Editors: Nick Gentle, Paul Tighe

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