Bloomberg News

Asian Stocks Outside Japan Rebound From Seven-Week Low on China

November 24, 2011

Nov. 24 (Bloomberg) -- Asian stocks outside of Japan rose after falling to a seven-week low yesterday on bets that China may fine tune anti-inflation policies. Japanese shares fell after a public holiday as speculation mounted Standard & Poor’s is preparing to cut the country’s sovereign-debt rating.

Agile Property Holdings Ltd., a Chinese property developer, jumped 13 percent in Hong Kong after China cut the reserve ratio for some rural credit cooperatives. Nintendo Co., the world’s largest maker of video-game players that gets 34 percent of its sales in Europe, lost 4.2 percent in Osaka as U.S. consumer spending retreated. Komatsu Ltd., Japan’s largest construction machinery maker, led machinery makers lower after a U.S. report showed orders for durable goods fell last month.

Asian investors are “encouraged by China relaxing the reserve rate requirement, which tend to suggest potential for more easing ahead,” said Andrew Sullivan, principal sales trader at Piper Jaffray Asia Securities Ltd. in Hong Kong. “People hope developers will have more access to cheap funding or people will have access to more mortgages and be able to buy units.”

The MSCI Asia Pacific excluding Japan Index climbed 0.7 percent after closing at its lowest since Oct. 6 yesterday. The MSCI Asia Pacific Index slipped 0.1 percent to 110.30 as of 7:08 p.m. in Tokyo with seven of the 10 industry groups dropping. The index is headed for the lowest close since Oct. 5.

Japan’s Nikkei 225 Stock Average fell 1.8 percent, extending losses after S&P said the nation hasn’t made progress in tackling the public debt burden, an indication it may lower the nation’s credit grade. Japan’s market was closed yesterday for a public holiday.

Policy Fine-tuning

Hong Kong’s Hang Seng Index gained 0.4 percent, while China’s Shanghai Composite Index added 0.1 percent. Australia’s S&P/ASX 200 slipped 0.2 percent. South Korea’s Kospi Index rose 0.7 percent. The BSE India Sensitive Index rose 1 percent in Mumbai.

Chinese developers gained after the People’s Bank of China cut the reserve ratio for more than 20 rural credit cooperatives nationwide by half a percentage point, according to an announcement from its Hangzhou branch in Zhejiang. While evidence is mounting that growth has moderated in the economy that’s led the global expansion, Premier Wen Jiabao has pledged to “fine tune” policy as needed.

Agile Property jumped 13 percent to HK$5.46. Some investors are bargain hunting after the stock almost retested its October low, Wee Liat Lee, a Hong Kong-based property analyst at Samsung Securities Co., said in an e-mail. Country Garden Holdings Co., a real estate developer, advanced 12 percent to HK$2.76 in Hong Kong.

Chinese utility firms gained after Economic Information Daily reported the nation may raise power prices, citing an unidentified person.

Power Producers

Huaneng Power International Inc., an operator of coal-fired power plants throughout China, rose 5.3 percent to HK$4.20. China Resources Power Holdings Co., an operator of coal-fired power plants in China, increased 5.7 percent to HK$14.88.

Futures on the Standard & Poor’s 500 Index rose 0.5 percent today. The index dropped 2.2 percent in New York yesterday after Germany failed to get bids for 35 percent of the 10-year bonds offered at a sale. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments rose to an all-time high yesterday, stoking concern the region’s debt crisis that began more than two years ago in Greece now threatens to engulf Germany.

About $1 trillion has been erased from U.S. market value since Nov. 15 amid concern that Europe’s debt crisis will hamper the global economy. The U.S. market will close today for Thanksgiving and trading will end at 1 p.m. tomorrow.

“The market has finally realized that Germany has a high level of public debt,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “Germany looks to be losing its safe-haven status, and it highlights the extent to which the European debt crisis has deteriorated. It can be only bad news for risky assets like equities.”

Japan Exporters

Some Japanese exporters fell. Nintendo, the maker of Wii gaming consoles, lost 4.2 percent to 10,850 yen. Canon Inc., the world’s biggest camera maker, declined 1.2 percent to 3,265 yen.

Machinery makers fell after the Commerce Department reported yesterday that U.S. bookings for equipment meant to last at least three years declined 0.7 percent last month as demand for aircraft and business equipment cooled.

Komatsu dropped 4.1 percent to 1,818 yen. Hitachi Construction Machinery Co, a Japanese machinery maker, lost 3.8 percent 1,279 yen.

The MSCI Asia Pacific Index declined 20 percent this year through yesterday, compared with a 7.6 percent drop by the S&P 500 and a 20 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.1 times estimated earnings on average, compared with 11.7 times for the S&P 500 and 9.6 times for the Stoxx 600.

BlueScope Steel Ltd., Australia’s biggest steelmaker, fell to a record low after saying it plans to sell new shares at a 34 percent discount to raise about A$600 million ($583 million) to pay debt. The stock fell 25 percent to 39 Australian cents.

--With assistance from Jonathan Burgos in Singapore. Editors: Nick Gentle, John McCluskey

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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


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