Bloomberg News

Most Asian Stocks Rise on China Optimism; Hong Kong Shares Drop

September 21, 2011

Sept. 21 (Bloomberg) -- Most Asian stocks rose after a gauge of economic indicators signaled growth in China is withstanding Europe’s debt crisis and a faltering U.S. economy. The MSCI Asia Pacific Index trimmed advances in late trading as European markets opened lower.

China Life Insurance Co., the nation’s biggest insurer by market value, rose 1.6 percent in Hong Kong after the Conference Board said its leading indicator index for the world’s second- largest economy rose 0.6 percent in July, citing a preliminary reading. BHP Billiton Ltd., the world’s largest mining company, climbed 0.9 percent in Sydney, reversing an earlier decline of as much as 0.5 percent. Esprit Holdings Ltd. plunged 11 percent after Morgan Stanley listed it as one of the Asian companies most at risk from Europe’s debt crisis.

The MSCI Asia Pacific Index, which swung between gains and losses at least seven times today, rose 0.2 percent to 118.12 as of 7:34 p.m. in Tokyo. About three stocks rose for every two that fell, as speculation grew that the Federal Reserve will today announce steps to bolster the world’s biggest economy. The gauge fell for the past two weeks on concern Europe’s debt crisis is spreading and signs of slowing U.S. growth.

“Any news suggesting China’s growth rate is firm provides comfort to investors who have been concerned about a hard landing alongside worries about a downturn in demand from the developed world,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “At the same time, markets are hanging on for what the Fed is going to do, and how U.S. markets might react.”

Nikkei, Hang Seng

Japan’s Nikkei 225 Stock Average gained 0.2 percent and Australia’s S&P/ASX 200 Index advanced 0.8 percent. South Korea’s Kospi Index added 0.9 percent and Taiwan’s Taiex Index rose 0.6 percent.

Hong Kong’s Hang Seng Index fell 1 percent, deepening losses after European markets opened, with Esprit tumbling 11 percent to HK$8.96. The benchmark Stoxx Europe 600 Index slipped as much as 1.1 percent today as European Union officials said they planned to return to Athens next week to complete a review of the Greek economy

Greek Finance Minister Evangelos Venizelos made “good progress” in a second round of talks with the European Union and International Monetary Fund aimed at staving off default, according to an EU statement. The statement said a “full mission” will return to Athens next week after Venizelos’s talks in coming days at the International Monetary Fund’s annual meeting in Washington.

Growth Projection

Stock gains were also limited today after the IMF said the world economy will expand 4 percent this year and next, revising down its June forecasts of 4.3 percent in 2011 and of 4.5 percent in 2012. The U.S. growth projection for 2011 was lowered to 1.5 percent from a 2.5 percent prediction in June.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent today amid optimism among some investors that Greece may satisfy requirements for aid that may help ease Europe’s debt crisis.

The MSCI Asia Pacific Index lost 14 percent this year through yesterday, compared with a 4.4 percent drop by the S&P 500 and a 17 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.9 times estimated earnings on average, compared with 12.1 times for the S&P 500 and 9.6 times for the Stoxx 600.

Chinese Economy

China Life rose 1.6 percent to HK$18.98 in Hong Kong. Energy producer China Shenhua Energy Co. climbed 1.3 percent to HK$34.65, while PetroChina gained as much as 2.1 percent before declining in late trading to close 0.7 percent lower at HK$9.45.

BHP rose 0.9 percent to A$37.13 in Sydney as New York- traded copper rose as much as 1.5 percent today, while Rio Tinto Group, the world’s second-biggest mining company by sales, added 1 percent to A$69.59. Mitsubishi Corp., the country’s biggest trading company, rose 0.5 percent to 1,752 yen in Tokyo. In Seoul, Korea Zinc Co., which produces gold and silver, advanced 2.7 percent to 406,500 won.

“It looks like China’s economy will be steady toward the end of this year,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “There’s a lot expectation that Fed will introduce some measures even if they aren’t that aggressive.”

Nuclear Power

Li & Fung Ltd., the biggest supplier of clothing and toys to retailers including Wal-Mart Stores Inc., gained 4.1 percent to HK$13.82 ahead of the scheduled U.S. Federal Reserve statement. James Hardie Industries SE, a building materials supplier that gets almost 70 percent of sales from the U.S., surged 5 percent to A$5.85 in Sydney.

Dongfang Electric Corp. jumped 8.6 percent to HK$22.85 in Hong Kong after the China Securities Journal, citing unidentified people, reported that China may resume approval of the nation’s new nuclear power projects early next year. Shanghai Electric Group Co. gained 5.7 percent to HK$2.95.

In Taipei, EVA Airways Corp. surged 6.8 percent to NT$17.35 and China Airlines Ltd. advanced 6.8 percent to NT$14.20 after the International Air Transport Association raised its 2011 forecast for global airline profits by 73 percent.

--With assistance from Yoshiaki Nohara in Tokyo. Editors: Jason Clenfield, John McCluskey

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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