Bloomberg News

Asia Stocks Rise Most Since March on European, China Optimism

October 14, 2011

Oct. 15 (Bloomberg) -- Asian stocks posted the biggest weekly gain since March amid rising confidence European policy makers will act to tame the region’s debt crisis and speculation China will boost support for its equity market.

Sony Corp., which depends on Europe for 21 percent of its sales, rose 8.2 percent as euro-area leaders pledged plans to protect the region’s banks. Bank of China Ltd. surged 12 percent in Hong Kong after a Chinese sovereign wealth fund said it began buying shares of the four biggest national banks. Esprit Holdings Ltd. jumped 13 percent in Hong Kong after the clothier refuted claims it overstated the number of its Chinese stores.

“There is hope that if a comprehensive European bank package is announced, the damage to the real economy will be less than currently expected,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That would be better news for global growth and commodity demand.”

The MSCI Asia Pacific Index gained 3.4 percent to 116.82 this week, the biggest weekly advance since the week ended March 25, after French President Nicolas Sarkozy and German Chancellor Angela Merkel pledged action on the euro region’s debt crisis. The index is down 15 percent this year amid concern the global economy is poised for another recession as Europe’s troubles worsens and U.S. growth falters.

Australia’s S&P/ASX 200 advanced 1 percent. South Korea’s Kospi Index rose 4.3 percent, and Hong Kong’s Hang Seng Index gained 4.5 percent. Japan’s Nikkei 225 Stock Average climbed 1.7 percent.

Exporters, Banks

Lenders and exporters advanced after Olli Rehn, the European Commission’s economic and monetary affairs commissioner, said the region’s debt crisis can be resolved.

Sony rose 8.2 percent to 1,531 yen. Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, rose 3 percent to 886,000 won. Westpac Banking Corp., Australia’s No. 2 lender by market value, advanced 1.7 percent to A$21.61. HSBC Holdings Plc, Europe’s biggest lender, rose 3.4 percent to HK$63.70 in Hong Kong.

Bank of China surged 11 percent to HK$2.68 after state- owned Central Huijin Investment Ltd. said it started buying shares of the four biggest national banks. China Minsheng Banking Corp., the nation’s leading non-state lender, gained 18 percent to HK$5.45.

‘Certainly Cheap’

“China’s purchases of banking shares is sending a message to investors that we’re nearing the floor,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management, which oversees about $72 billion. “Valuations, particularly for Chinese banks, are certainly cheap.”

Esprit Holdings jumped after refuting a report by Hong Kong-based Next Magazine that the clothier had overstated the number of its stores in China. The retailer said the claims had arisen due to outdated information on its website. Shares jumped 12 percent to HK$11.60.

Japanese exporters fell after floods in Thailand disrupted production at their factories. Chemicals maker Showa Denko K.K. fell 3.2 percent to 150 yen, while Nikon Corp., which produces cameras and chipmaking equipment, plunged 9.3 percent to 1,747 yen.

Among other decliners, optical-equipment maker Olympus Corp. dropped 15 percent to 2,045 yen after announcing its board voted to replace President Michael C. Woodford. Chairman Tsuyoshi Kikukawa said the ousted executive didn’t focus enough on bringing employees together toward a common goal. Woodford couldn’t be reached immediately for comment.

--With assistance from Shani Raja in Sydney in Tokyo. Editors: Jim Powell, Paul Tighe

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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