Bloomberg News

Asian Stocks Advance Ahead of German Vote on European Bailout

September 29, 2011

Sept. 29 (Bloomberg) -- Asian stocks rose, with the regional benchmark index heading for its biggest three-day gain since December 2009, as German lawmakers will vote to expand a bailout fund for Europe’s debt-stricken nations.

Mitsubishi UFJ Financial Group Inc., Japan’s largest lender, gained 2.3 percent in Tokyo on optimism the German vote will ease concerns about the global financial system. Canon Inc., the world’s biggest camera maker, gained 1.6 percent after orders for U.S. capital goods unexpectedly climbed. BHP Billiton Ltd., the world’s No. 1 mining company, fell 1.4 percent in Sydney after copper futures extended declines.

“Investors appear to be pinning their hopes on the German vote on the euro-area rescue fund,” said Im Jeong Jae, a Seoul- based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. “They seem to be betting that the region’s debt troubles, though there will be sporadic bumps, will eventually be resolved.”

The MSCI Asia Pacific Index rose 0.4 percent to 114.24 as of 4:26 p.m. Mumbai time, after having lost as much as 1.3 percent. More than two stocks advanced for each that fell.

The gauge is headed for an 8.4 percent decline this month, extending a slump this quarter to 15 percent, the steepest drop since the three months ended December 2008. Stocks have plunged amid concern the global economy is poised for another recession as Europe’s debt crisis worsens and U.S. economic growth slows.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average added 1 percent, rebounding from losses of as much as 1.3 percent. South Korea’s Kospi Index climbed 2.7 percent, wiping out losses of as much as 0.9 percent.

Australia’s S&P/ASX 200 Index lost 0.8 percent. Markets in Hong Kong were shut due to a typhoon. China’s Shanghai Composite Index decreased 1.1 percent.

Futures on the Standard & Poor’s 500 Index advanced 0.6 percent, erasing losses of as much as 0.7 percent earlier. In New York, the index dropped 2.1 percent yesterday after an official said the European Commission is resisting a push to impose bigger writedowns on banks’ holdings of Greek government debt than those agreed at a July 21 summit.

Global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year, with 72 percent predicting a country abandoning the euro as a shared currency within five years, a Bloomberg survey found.

Short-selling Bans

Italian and Spanish financial market regulators extended temporary bans on short selling of financial shares that were introduced last month in a bid to stem market volatility, the European Securities and Markets Authority said. German lawmakers backed an enhanced euro-area rescue fund after Asian markets closed today as European officials turn to look at what next steps may be needed to stem the debt crisis.

“The German parliament will pass the measure, which is supporting financial equities,” Kazuyuki Terao, chief investment officer of RCM Japan Ltd., said before the vote.

Mitsubishi UFJ Financial increased 2.3 percent to 355 yen. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender, gained 2.3 percent to 2,219 yen.

Exporters advanced after orders for U.S. capital goods climbed in August by the most in three months, a sign business investment continues to support the recovery. The median projection of 77 economists surveyed by Bloomberg News was for a 0.2 percent decline in total orders.

Canon gained 1.6 percent to 3,560 yen. Nintendo Co., the maker of Wii game consoles that gets about 39 percent of sales in the “Americas,” jumped 3.1 percent to 11,330 yen in Tokyo. Honda Motor Co., the Japanese carmaker that depends on North America for 44 percent of sales, rose 1 percent to 2,332 yen.

‘Excessively Undervalued’

LG Electronics Inc., the world’s third-largest maker of mobile phones by sales, surged 11 percent to 68,800 won, the biggest advance on the MSCI Asia Pacific Index. A 25 percent slump this quarter through yesterday made the stock “excessively undervalued,” Park Won Jae, an analyst at Daewoo Securities Co. in Seoul, wrote in a report today.

“Opportunities are also rising for LG as mobile-phone carriers introduce more-advanced services, in which the company has made a lot of investments,” Park said.

Raw-material producers dropped after commodities extended a decline on concern Europe’s sovereign-debt crisis will hurt global growth and reduce demand for industrial raw materials. A gauge of metals in London dropped 3.2 percent yesterday. Copper for three-month delivery fell as much as 5.9 percent today.

BHP fell 1.4 percent to A$35.04 in Sydney. Rio Tinto Group, the second-biggest mining company by sales, slipped 2.5 percent to A$62.45. Mitsubishi Corp., Japan’s largest commodities trader, lost 1.7 percent to 1,590 yen in Tokyo.

The MSCI Asia Pacific Index lost 17 percent this year through yesterday, compared with an 8.5 percent drop by the S&P 500 and an 18 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.5 times estimated earnings on average, compared with 11.6 times for the S&P 500 and 9.6 times for the Stoxx 600.

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

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net.

To contact the editor responsible for this story John McCluskey at j.mccluskey@bloomberg.net.


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