Bloomberg News

Asia Stocks Gain as Buffett Buys on ‘Sale,’ Tech Rises on Google

August 16, 2011

Aug. 16 (Bloomberg) -- Asian stocks, trading at their cheapest since 2008, advanced for a second day as Google Inc.’s largest acquisition boosted technology shares and investor Warren Buffett said he was buying equities at “sale” prices.

Samsung Electronics Co. surged 6.1 percent in Seoul after Google, the biggest maker of smartphone software, agreed to buy Motorola Mobility Holdings Inc. and as Korean shares resumed trading after a holiday yesterday. Foxconn International Holdings Ltd., Motorola Mobility’s biggest supplier according to Bloomberg data, leaped 13 percent in Hong Kong. Westpac Banking Corp., Australia’s No. 2 lender, slumped 4.4 percent in Sydney after third-quarter profit slipped. The MSCI Asia Pacific Index pared gains after Germany reported that economic growth almost stalled in the second quarter.

The Asia-Pacific gauge rose 0.2 percent to 124.68 as of 7:51 p.m. in Tokyo. About five stocks advanced for every four that declined, and six of 10 industry groups tracked by the index climbed. The gauge traded at 12.5 times estimated earnings at the close yesterday, near the lowest level since December 2008, according to data compiled by Bloomberg.

“I like buying on sale,” said Buffett, whose Berkshire Hathaway Inc. made its biggest bets on the stock market of this year on Aug. 8 as the Standard & Poor’s 500 Index plunged the most since December 2008. “Last Monday, we spent more money in the stock market buying than any day this year,” Buffett, Berkshire’s chief executive officer, said in a television interview with Charlie Rose on PBS.

Germany Slows

The Asia-Pacific index completed its third straight weekly loss last week on Aug. 12 after Standard & Poor’s cut its rating on U.S. government debt and concern grew that Europe’s credit crisis may spread. Ten-day historical volatility on the MSCI index climbed last week to the highest level since March.

Stocks’ pared gains today as a report showed Germany’s economy, Europe’s largest, expanded just 0.1 percent in the second quarter as the region’s sovereign debt crisis weighed on confidence. Economists had estimated growth of 0.5 percent, according to the median of 33 economist estimates in a Bloomberg News survey.

Separately, the Les Echos daily reported that France is likely to cut its growth forecasts after the economy stagnated in the second quarter. The paper cited an unidentified person close to President Nicolas Sarkozy.

Australia’s S&P/ASX 200 Index fell 0.8 percent in Sydney, after swinging between gains and losses as the Reserve Bank of Australia released minutes of its Aug. 2 meeting explaining why it extended a pause on interest rates.

‘Acute Uncertainty’

The central bank kept the overnight cash rate target unchanged at 4.75 percent, the highest in the developed world, for an eighth straight meeting, saying risks to demand probably increased because of “acute uncertainty in global financial markets,” the minutes said.

Japan’s Nikkei 225 Stock Average rose 0.2 percent. South Korea’s Kospi Index gained 4.8 percent, paced by industrial shares. Hong Kong’s Hang Seng Index reversed earlier gains to fall 0.2 percent.

Futures on the Standard & Poor’s 500 Index slid 1.2 percent today. The index gained 2.2 percent yesterday in New York, erasing last week’s drop, as $21.5 billion in takeovers and valuations near the cheapest level in two years helped it extend its best three-day rally since 2009.

Google Inc., the biggest maker of smartphone software, agreed to buy Motorola Mobility for $12.5 billion in its largest acquisition, gaining mobile patents and expanding in the hardware business.

‘Compelling Valuations’

“With the prevailing nervousness and uncertainty surrounding the global economic outlook, rising corporate activity plays a crucial role in increasing confidence around what appear to be compelling valuations,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne.

Foxconn jumped 13 percent to HK$3.86 in Hong Kong, while Renesas Electronics Corp., also a supplier to Motorola Mobility, gained 1.9 percent to 549 yen in Tokyo. Samsung rose 6.1 percent to 750,000 won in Seoul.

Goldman Sachs Group Inc. said Google’s purchase of Motorola Mobility may be positive for Asian Android-phone makers as it helps reduce litigation risk.

The MSCI Asia Pacific Index lost 9.7 percent this year through yesterday, compared with drops of 4.2 percent by the S&P 500 and 14 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.5 times estimated earnings on average, compared with 12.1 times for the S&P 500 and 9.8 times for the Stoxx 600.

‘Relatively Cheap’

“Large-scale acquisitions are increasing in the U.S., indicating stocks are relatively cheap,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.

Westpac fell 4.4 percent to A$20.25 in Sydney after saying fiscal third-quarter profit slipped as demand for lending fell. Unaudited cash earnings in the three months ended June 30 were about A$1.55 billion ($1.63 billion), Sydney-based Westpac said in a statement.

“It’s a subtrend revenue-growth environment,” James Ellis, an analyst at Credit Suisse Group AG, said ahead of today’s report. Westpac’s unaudited cash earnings missed his forecast for A$1.63 billion.

Rival National Australia Bank Ltd. fell 1.5 percent to A$23.21 and Commonwealth Bank of Australia, the nation’s biggest by market value, sank 1.2 percent to A$46.83. Australia’s four biggest lenders temporarily pared losses after the RBA minutes were released.

Tokyo Electric Power Co., owner of the crippled Fukushima Dai-Ichi nuclear plant, led declines among power companies in Tokyo after Goldman Sachs Group Inc. said uncertainty surrounding government policy made utilities a poor long-term investment. The stock fell 3.2 percent to 425 yen. Rival Kansai Electric Power Co. slid 1.8 percent to 1,290 yen.

--With assistance from Akiko Ikeda in Tokyo. Editors: John McCluskey, Jason Clenfield

To contact the reporter 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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