Bloomberg News

Asian Stocks Advance as China Eases, Central Banks Act on Crisis

December 01, 2011

Dec. 1 (Bloomberg) -- Asian stocks jumped, with the regional index set for its biggest gain in a month, after six central banks cut the cost of emergency dollar funding for European banks and China reduced its reserve ratio for lenders.

Agile Property Holdings Ltd., a Chinese property developer, and Evergrande Real Estate Group Ltd., a Guangzhou-based developer, gained at least 11 percent in Hong Kong. Hitachi Construction Machinery Co., a machinery maker that gets about a quarter of its revenue from China, jumped 7 percent in Tokyo. Jiangxi Copper Co., China’s biggest producer of the metal, surged 11 percent and BHP Billiton Ltd., the world’s biggest mining company, gained 3.9 percent after commodity prices rose.

“The coordinated dollar funding by six central banks helps to ease concerns about a market collapse because a shortage of liquidity was one of the main things that worsened the 2008 financial crisis,” said Ryota Sakagami, Tokyo-based chief strategist at SMBC Nikko Securities. “The reduction of reserve requirements in China will lead to an increase in money supply and that’ll push up the stock market in China. It also enhances the expectation that China will turn its policy stance toward monetary easing from now on. Companies gaining profits from China will positively react.”

The MSCI Asia Pacific Index rose 2.8 percent to 116.77 as of 11:17 a.m. in Tokyo, headed for its largest gain since Oct. 27. All 10 industry groups on the measure advanced, with about 10 stocks gaining for each that declined.

The index, priced in dollars, fell during normal trading yesterday but turned positive as the co-ordinated central bank action spurred overnight gains by Japan’s yen and the Australian dollar, inflating the value of stocks denominated in those currencies.

Hong Kong’s Hang Seng Index jumped 5.4 percent, set for its biggest gain in almost two months, while China’s Shanghai Stock Exchange Composite Index increased 3 percent. Japan’s Nikkei 225 Stock Average rose 2 percent. Australia’s S&P/ASX 200 index gained 2.3 percent. South Korea’s Kospi Index advanced 3.7 percent.

The MSCI Asia Pacific Index sank 6.7 percent last month, compared with a 0.5 percent drop by the S&P 500 and a 1.4 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.6 times for the S&P 500 and 10.5 times for the Stoxx 600.

--Editor: Nick Gentle

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net.

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


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