Bloomberg News

Asia Stocks Gain in Week on Speculation Europe Will Fix Crisis

September 30, 2011

Oct. 1 (Bloomberg) -- Asian stocks rose this week, paring the biggest quarterly slump in three years, on speculation Europe’s leaders may succeed in preventing the region’s credit crisis from spilling into a global recession.

HSBC Holdings Plc, Europe’s biggest lender by market value, gained 2.4 percent in Hong Kong in the week, after reports the European Central Bank may restart covered-bond purchases and take more monetary-easing measures. Canon Inc., a camera maker that depends on Europe for about a third of its sales, surged 5.8 percent in Tokyo. Billabong International Ltd., a global surfwear maker, jumped 11 percent in Sydney, while BHP Billiton Ltd., the world’s biggest mining company, added 1.4 percent.

“There’s no doubt the markets are very oversold,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “There’s good potential for a bounce and it then becomes about what follow-through reaction we see from Europe. The real issue is whether it’s a durable bounce or whether it’s a dead-cat bounce.”

The MSCI Asia Pacific Index rose 1.2 percent in the five days through Sept. 30, the measure’s first weekly advance in four. Still, the index tumbled 16.2 percent in the quarter, the biggest drop since 2008, as concern mounted that Europe’s sovereign-debt crisis combined with a slowdown in the U.S. economy may drag the world back into recession.

Euro Region

Hong Kong’s Hang Seng Index, which fell 0.4 percent this week, completed its worst quarterly loss in a decade, slumping 21 percent. Japan’s Nikkei 225 Stock Average climbed 1.6 percent in the week, South Korea’s Kospi Index gained 4.3 percent and Australia’s S&P/ASX 200 Index rose 2.7 percent.

HSBC ended the week at HK$60.90 in Hong Kong after a euro- region central bank official said the ECB may talk about resuming some bonds purchases from banks when it meets on Oct. 6. Standard Chartered Plc, the U.K.’s third-biggest lender by market value, gained 2.7 percent to HK$158.90, while Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, advanced 5.6 percent to 2,206 yen in Tokyo.

The ECB may also consider re-offering 12-month loans to banks at its policy meeting next week, according to the official. Interest-rate cuts are likely to be discussed, though they are not on the agenda, the official said. A spokesman for the Frankfurt-based ECB declined to comment.

Exporters to Europe also advanced in the week. Canon rose 5.8 percent to 3,550 yen in Tokyo. Nissan Motor Co., a carmaker that gets about 15 percent of sales from Europe, increased 7.8 percent to 693 yen. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, climbed 1.6 percent to 1,507 yen.

Billabong, BHP

Billabong jumped to A$3.32 in Sydney, while in Hong Kong, Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, jumped 16 percent to HK$9.55.

BHP Billiton rose 1.4 percent to A$35.02 in Sydney. Cnooc Ltd., China’s biggest offshore oil producer, gained 9.8 percent to HK$13.

“Policy makers have been pushed to act because Europe’s situation has gotten so bad,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. “That’s given stocks a little lift, but if real progress isn’t made, we could see markets go right back down again.”

Concerns the global economy may be sliding into recession drove the Asia-Pacific gauge down more than 20 percent from its May 2 peak earlier in the week, a decline defined as a “bear market” by some investors. Similar concerns resurfaced toward the end of the week after U.S. economic reports failed to ease speculation that growth in the world’s largest economy is faltering.

Stocks in the Asian benchmark are currently valued at about 11.5 times estimated earnings, compared with 11.4 times for the Standard & Poor’s 500 Index and 9.5 times for the Stoxx 600.

--With assistance from Anna Kitanaka in Tokyo and Jonathan Burgos in Singapore. Editors: Matthew Oakley, Paul Tighe

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net. Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

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


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