Bloomberg News

Asia Stocks Rise as Germany, France Say Greece to Remain in Euro

September 15, 2011

Sept. 15 (Bloomberg) -- Asian stocks climbed, with the regional benchmark index rebounding from its lowest level in more than a year, after French President Nicolas Sarkozy and German Chancellor Angela Merkel said Greece will stay in the euro zone.

Westpac Banking Corp. gained 2.6 percent in Sydney. Samsung Electronics Co., which receives 20 percent of its revenue from Europe, rose 2.4 percent in Seoul. S-Oil Corp., which refines and sells petroleum, surged 12 percent. Taiwan Semiconductor Manufacturing Co. advanced 2.8 percent on higher chip prices. Esprit Holdings Ltd., the biggest Hong Kong-listed clothier, tumbled 18 percent after reporting profit plunged 98 percent.

“Germany and France’s commitment to continue supporting Greece’s European Union membership diminishes the likelihood that it will be allowed to default,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “If Greece avoids default, it lessens any flow-on impact through the global banking system, which in turn is positive for Asian stocks.”

The MSCI Asia Pacific Index gained 1.4 percent to 117.91 as of 5:51 p.m. in Tokyo. All 10 industry groups on the measure rose, with about seven stocks gaining for every three that declined. The index yesterday fell to its lowest level since Aug. 25 last year. Concern the global economy was slipping back into a recession amid a worsening European-debt crisis and slowing U.S. growth triggered a 17 percent plunge in the MSCI Asia Pacific Index between this year’s high on May 2 and yesterday.

Greece and Europe

Japan’s Nikkei 225 Stock Average climbed 1.8 percent. South Korea’s Kospi Index rose 1.4 percent. Australia’s S&P/ASX 200 Index advanced 1.7 percent in Sydney. Hong Kong’s Hang Seng Index climbed 0.7 percent and China’s Shanghai Composite Index fell 0.2 percent.

Futures on the Standard & Poor’s 500 Index climbed 0.5 percent today. In New York, the index advanced for a third day, rising 1.4 percent yesterday. Sarkozy and Merkel are “convinced” Greece will remain in the euro area, according to a statement issued by Sarkozy after they spoke to Greek Prime Minister George Papandreou by telephone.

Stocks also rose after U.S. Treasury Secretary Timothy F. Geithner said “there is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market.” At a meeting with European Union finance ministers on Sept. 16, Geithner will likely urge European governments to step up their crisis-fighting efforts.

Banks Rise

Westpac Banking Corp. gained 2.6 percent to A$19.41. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded lender, rose 1.5 percent to 330 yen in Tokyo.

Financial shares provided the biggest support to the MSCI Asia Pacific Index as a group, while consumer discretionary stocks were the fourth-biggest boost.

Samsung Electronics rallied 2.4 percent to 771,000 won in Seoul. Toyota Motor Corp., the world’s largest carmaker, gained 2.1 percent to 2,690 yen, the second-biggest boost to the MSCI Asia Pacific Index. Honda Motor Co., which receives about 80 percent of its revenue from outside Japan, jumped 4 percent to 2,388 yen.

“We’re seeing some risk-on trading on hopes that the European issue will be pushed further down the road,” said Belinda Allen, senior analyst of investment markets research at Colonial First State Global Asset Management in Sydney, which oversees about $150 billion. “Despite the comments from the French and German leaders, Europe still has a lot of issues to work through that will impact markets over coming months.”

S-Oil, Elpida

S-Oil surged 11 percent to 121,500 won in Seoul on speculation improved returns from processing crude into oil products will boost earnings. Prices of paraxylene, a petrochemical used in synthetic fibers, have also increased, according to Cho Seung Yeon, an analyst at HMC Investment Securities Co. The stock posted the biggest gain on the MSCI Asia Pacific Index.

Chipmaker Elpida Memory Inc. jumped 5 percent to 564 yen. The company said it plans to shift some production from Japan to Taiwan to cope with a stronger yen and an industry slump. Goldman Sachs Group Inc. said in a report today that the shift overseas by Elpida may help cut a surplus in dynamic-random- access-memory chips, which would be positive for the price of the semiconductors.

Chipmakers Gain

Chipmakers boosted information technology stocks to the biggest gain among the 10 industry groups on the MSCI Asia Pacific Index after DRAM prices jumped. Taiwan Semiconductor Manufacturing advanced 2.8 percent to NT$69.1 in Taipei, and Hynix Semiconductor Inc. rose 6.3 percent to 21,100 won in Seoul. Semiconductor Manufacturing International Corp. surged 9 percent to 48.5 Hong Kong cents, the second-biggest increase on the MSCI Asia Pacific Index.

The price of DDR3 2-gigabit DRAM jumped 8.9 percent at yesterday’s close, the most since Jan. 28, according to data by TrendForce Corp.’s DRAMExchange.

Among shares that fell, Esprit plunged 18 percent to HK$15.08. Net income plunged to HK$79 million in the year through June from HK$4.23 billion in the previous period. The mean estimate of analysts surveyed by Bloomberg was for profit to slide to HK$3.14 billion.

The MSCI Asia Pacific Index declined 16 percent this year through yesterday, compared with a 5.5 percent drop by the S&P 500 and a 19 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.6 times estimated earnings on average, compared with 11.9 for the S&P 500 and 9.4 times for the Stoxx 600.

--With assistance from Shinhye Kang in Seoul. Editors: Nick Gentle, John McCluskey

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@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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