Bloomberg News

Asian Stocks Rise, Erasing Year’s Loss, on Europe Debt Agreement

July 22, 2011

July 22 (Bloomberg) -- Asian stocks rose, with the regional benchmark index erasing its loss for the year, as a new aid plan for Greece eased concern Europe’s debt crisis will spread, reducing uncertainty about bank earnings.

HSBC Holdings Plc, Europe’s biggest lender by market value, climbed 2.8 percent in Hong Kong. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, jumped 3.3 percent in Tokyo after the Nikkei newspaper said the lender’s profit may have more than doubled. Samsung Electronics Co., the world’s biggest maker of computer memory chips, rose 1 percent after Microsoft Corp. and Advanced Micro Devices Inc. posted profits that beat estimates.

“Europe seems to have prevented the Greek sovereign-debt issue from escalating into something bigger,” said Ng Soo Nam, the Singapore-based chief investment officer at Nikko Asset Management Co., which oversees about $154 billion. “There’s a case for a decent rebound for the market from these levels.”

The MSCI Asia Pacific Index gained 1.3 percent 138.94 as of 7:16 p.m. in Tokyo, its biggest advance this month and headed toward its highest close since May 5. About four stocks rose for each that fell on the gauge, which is headed for a 2.3 percent advance this week. The measure dropped last week for the first time in four weeks after European finance ministers declined to rule out a temporary default for Greece and as Moody’s Investors Service put the U.S. under review for a possible credit-rating downgrade.

Japan’s Nikkei 225 Stock Average and South Korea’s Kospi Index both increased 1.2 percent. Taiwan’s Taiex Index gained 0.6 percent. Hong Kong’s Hang Seng Index advanced 2.1 percent, the most among regional benchmark indexes. China’s Shanghai Composite Index added 0.2 percent. Australia’s S&P/ASX 200 Index climbed 1 percent.

‘Risk Tolerance’

Futures on the Standard & Poor’s 500 Index added 0.3 percent today. The index rose 1.4 percent yesterday in New York as European officials announced 159 billion euros ($230 billion) in new aid for Greece to stop the region’s debt crisis from spreading.

Europe’s steps to support Greece and safeguard other euro- area nations will allow markets to move past contagion fears, Institute of International Finance Managing Director Charles Dallara said.

“Confirmation there’s going to be more support for Greece eases concern about the financial system and it gives investors a little more tolerance for risk,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

Esprit Surges

Companies reliant on Europe advanced. HSBC climbed 2.8 percent to HK$78 in Hong Kong. Esprit Holdings Ltd., the Hong Kong-based clothier that counts Europe as its biggest market, jumped 5.2 percent to HK$24.15. Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, increased 3.3 percent to HK$13.14.

U.S stocks also rose after the New York Times reported that President Barack Obama and House Speaker John Boehner were close to a “major budget deal,” boosting optimism the government will avoid defaulting on its debt. Jay Carney, Obama’s spokesman, and Boehner responded to the story by saying there is no deal.

A gauge of finance companies led the advance among the 10 industry groups in the MSCI Asia Pacific Index after Morgan Stanley, the world’s largest brokerage, posted a second-quarter loss that was smaller than analysts estimated.

Yuanta Financial Holding Co., the Taiwanese financial services company, advanced 4.2 percent to NT$21.20. Nomura Holdings Inc., Japan’s No. 1 brokerage, gained 3.2 percent to 393 yen in Tokyo. Smaller rival Daiwa Securities Group Inc. rose 2 percent to 355 yen.

Commonwealth Bank

Mitsubishi UFJ Financial advanced 3.3 percent to 407 yen. The Japanese bank may post net income of about 400 billion yen ($5.1 billion) in the quarter ended June 30, compared with 166.3 billion yen a year earlier, the Nikkei newspaper reported. Mitsubishi UFJ said in a statement it is still in the process of compiling its earnings reports.

Commonwealth Bank of Australia, the nation’s No. 1 lender by market value, advanced 1.6 percent to A$50.52 in Sydney. The bank appointed Ian Narev to replace Chief Executive Officer Ralph Norris in December as competition intensifies in the country’s weakest mortgage market in three decades.

Information technology companies climbed after Microsoft, the largest software maker, and Advanced Micro Devices, the second-biggest manufacturer of processors for personal computers, both reported profits that beat estimates.

Samsung Electronics rose 1 percent to 850,000 won. Quanta Computer Inc., the world’s largest laptop computer maker by sales, added 0.7 percent to NT$68.90. Lenovo Group Ltd., China’s biggest maker of personal computers, gained 1.8 percent to HK$5.15 in Hong Kong.

Oil Rigs

The MSCI Asia Pacific Index erased its loss for the year as companies reported positive earnings. Among the 47 companies in the gauge that posted results since July 11, 29 beat the average profit estimate, data compiled by Bloomberg showed.

Keppel Corp., the world’s biggest builder of oil platforms, advanced 3.1 percent to S$11.16 in Singapore. The company said net income climbed 9 percent from a year earlier to S$384.9 million ($318 million), exceeding the S$341.5 million average of four analysts’ estimates compiled by Bloomberg.

The regional benchmark index lost 0.4 percent this year through yesterday, compared with a gain of 6.9 percent by the S&P 500 and a drop of 1.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.6 times estimated earnings on average, compared with 13.5 times for the S&P 500 and 11 times for the Stoxx 600.

--With assistance from Akiko Ikeda in Tokyo. Editor: Nick Gentle

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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


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