Bloomberg News

Asia Stocks Set to Rise Most in a Week Since ’09 on U.S., Europe

October 28, 2011

Oct. 28 (Bloomberg) -- Asian stocks rose, sending the regional benchmark index toward its biggest weekly gain in more than two years, as the fastest U.S. economic growth in a year and Europe’s debt deal boosted the outlook for exporters.

Honda Motor Co., Japan’s second-largest carmaker by market value that gets 83 percent of its revenue abroad, rose 4.4 percent after U.S. household purchases beat estimates. HSBC Holdings Plc, Europe’s biggest lender, advanced 4.2 percent as Europe’s announcements eased concerns about the global financial system. Jiangxi Copper Co., China’s No. 1 producer of the metal by market value, increased 1.4 percent after metal prices gained.

“Consumer spending has contributed a lot to U.S. growth, while inventory investment declined,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “That’s a very good form of growth. Risk appetite should rise after Europe delivered a big answer to the debt crisis that’s plagued the market for a long time. I expect stocks to be firm after jumping.”

The MSCI Asia Pacific Index rose 1.3 percent to 124.54 as of 7:54 p.m. in Tokyo. The measure has gained 7.4 percent this week, the most since the week ended May 8, 2009. More than two stocks rose for each that fell on the gauge, which is set for its biggest month of increase since May 2009. Nine of 10 industry groups on the gauge advanced.

U.S. Growth

Futures on the Standard & Poor’s 500 Index fell 0.6 percent. In New York, the index rose 3.4 percent yesterday after the U.S. economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support a recovery that had been on the brink of faltering. Household purchases, the biggest part of the economy, rose at a 2.4 percent pace, beating estimates.

Japan’s Nikkei 225 Stock Average added 1.4 percent and South Korea’s Kospi Index advanced 0.4 percent. Australia’s S&P/ASX 200 added 0.1 percent after swinging between gains and losses. Hong Kong’s Hang Seng Index climbed 1.7 percent, rising 11 percent increase this week, its biggest such advance since May 2009.

The number of contracts to buy previously owned U.S. homes unexpectedly fell in September as lower prices and borrowing costs failed to support demand. A separate report showed fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market.

“It’s not an economic scenario at this stage that the U.S. will go into a recession,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “The market has been pricing in less macro-economic risks as a result of what happened over the last 24 hours.”

Honda, Hyundai

Asian exporters advanced. Honda added 4.4 percent to 2,498 yen. Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, rose 2.3 percent to 945,000 won. Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., jumped 5.4 percent to HK$15.56. Nintendo Co., Japan’s maker of video-game players that gets 39 percent of its sales in the Americas, jumped 6 percent to 11,780 yen.

Global stocks rallied yesterday after European leaders talked bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.

Banks rose. HSBC Holdings rallied 4.2 percent to HK$70.10. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender, added 0.9 percent to 2,253 yen.

Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, rose 2 percent to HK$5.02 after saying third-quarter profit climbed 28 percent. China Construction Bank Corp., the nation’s second-largest lender that reports earnings today, gained 3 percent to HK$5.85.

Mining Companies

The MSCI Asia Pacific Index declined 11 percent this year through yesterday, compared with a 2.1 percent gain by the S&P 500 and a 9.6 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.8 times for the Stoxx 600.

Mining companies advanced after copper in London jumped as much as 1.7 percent to $8,280 a metric ton. Three-month copper on the London Metal Exchange has increased about 14 percent this week. BHP Billiton Ltd., Australia’s No. 1 mining company, added 0.9 percent to A$38.69. Jiangxi Copper rose 1.4 percent to HK$20.05.

American depositary receipts of Baidu Inc., China’s biggest Internet company by market value, soared 11 percent to $150 in Singapore after saying third-quarter profit rose 80 percent, beating analysts’ estimates, as revenue from search-engine advertising surged.

--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


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