Bloomberg News

Asia Stocks Jump as Europe Agrees Greek Deal, China Easing Seen

October 27, 2011

Oct. 27 (Bloomberg) -- Asian stocks rose, sending the benchmark index toward the highest close in almost eight weeks, after European leaders made a breakthrough in resolving the debt crisis and Chinese stocks surged on speculation the country may ease monetary policy.

Esprit Holdings Ltd., a clothier that gets 79 percent of its revenue in Europe, jumped 6.8 percent in Hong Kong. China Overseas Land & Investment Ltd., a builder controlled by the mainland’s construction ministry, soared 12 percent to HK$14.70. Komatsu Ltd., Japan’s largest construction machinery maker, gained 4 percent after orders for U.S. durable goods excluding transportation equipment increased.

“There’s a sense of achievement in terms of agreement among nations, and now the question is how banks and people in Greece will resist the implementation of the plans,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s No. 3 lender by market value. “Stocks have risen, pricing in this kind of development.”

The MSCI Asia Pacific Index gained 3.1 percent to 122.88 as of 7:35 p.m. in Tokyo, set for the highest close since Sept. 2. Almost six stocks rose for each that fell on the measure, with all 10 industry groups climbing.

Hong Kong’s Hang Seng Index added 3.3 percent, its highest close in more than a month. Brokerages including Guotai Junan Securities Co., Mizuho Securities Asia Ltd. and Barclays Plc. said China may cut banks’ reserve requirements before the end of this year. The index has risen 21 percent from a low on Oct. 4, exiting a so-called bear market after two months.

ASX 200, Nikkei

Australia’s S&P/ASX 200 jumped 2.5 percent after trading resumed at 2 p.m. in Sydney. Traders in Australia were unable to react to the European news for four hours because the market was halted by a technical glitch five minutes after the open.

Japan’s Nikkei 225 Stock Average added 2 percent. South Korea’s Kospi Index gained 1.5 percent.

Asian stocks extended gains after the second summit in four days delivered a plan that the region’s leaders say points the way out of the sovereign-debt crisis, even if key details are lacking.

Futures on the Standard & Poor’s 500 Index rose 2 percent today. In New York, the index added 1.6 percent yesterday.

Asian exporters and banks gained, with Esprit Holdings advanced 6.8 percent to HK$12.02. Sony Corp., Japan’s No. 1 exporter of consumer electronics, rose 5.4 percent to 1,650 yen. Nissan Motor Co., Japan’s third-largest carmaker by market value, gained 4.2 percent to 719 yen.

‘Breakthrough’

“It is a breakthrough,” Patrick Bennett, a Hong Kong- based strategist at Canadian Imperial Bank of Commerce, said in a Bloomberg Television interview. “We’ve got an apparent agreement on a haircut of Greek debt, a recapitalization of banks, and some leverage of the fund so it was the best that we could have got.”

Sumitomo Mitsui Financial Group Inc., Japan’s second- biggest lender, rose 5.1 percent to 2,234 yen. HSBC Holdings Plc, Europe’s biggest lender, gained 2.4 percent to HK$67.30. Commonwealth Bank of Australia, Australia’s biggest lender by market value, rose 1.8 percent to A$49.99.

Chinese property shares traded in Hong Kong surged on speculation the mainland’s will ease monetary policies to boost the economy. China Overseas Land & Investment soared 12 percent to HK$14.70. China Resources Land Ltd., also a state-controlled developer, jumped 14 percent. The stock was raised to “buy” from “hold” at BNP Paribas SA.

Reserve Requirements

China may cut banks’ reserve requirements before the end of this year to stoke lending to small companies and boost the economy, according to Guotai Junan, Mizuho and Barclays.

Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. rose at least 4.6 percent.

U.S. durable goods excluding transportation equipment rose in September by the most in six months. Another report showed purchases of new houses increased more than forecast in September as discounted prices lured buyers in some parts of the country.

Machinery makers advanced. Komatsu added 4 percent to 1,916 yen, and Fanuc Corp., Japan’s No. 1 maker of controls used to run machine tools, added 4.6 percent to 13,080 yen.

The MSCI Asia Pacific Index declined 13 percent this year through yesterday, compared with a 1.2 percent drop by the S&P 500 and a 13 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.1 times estimated earnings on average, compared with 12.5 times for the S&P 500 and 10.4 times for the Stoxx 600.

Olympus Corp., an optical-equipment maker, surged 23 percent, the most since at least 1974, to 1,355 yen after company Chairman and President Tsuyoshi Kikukawa resigned yesterday amid a scandal related to $687 million in fees paid by the company during a $2 billion takeover of Gyrus Group Ltd. in 2008.

Michael C. Woodford, the company’s former chief executive officer, said he will meet with the Federal Bureau of Investigation and submit documents concerning the payments.

--Editors: Jason Clenfield, Nick Gentle

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


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus