Bloomberg News

Asian Stocks Rise for Third Week on China, U.S. Economic Data

January 08, 2012

Jan. 7 (Bloomberg) -- Asian stocks rose for a third week, its longest streak of weekly advances since July, as manufacturing growth from China to the U.S. stoked optimism the global economy will withstand Europe’s sovereign-debt crisis.

Toyota Motor Corp., Asia’s biggest carmaker by market value, climbed 2.9 percent this week in Tokyo. Komatsu Ltd., a Japanese maker of construction equipment that gets about 23 percent of sales from China, gained 1.5 percent. PetroChina Co., the nation’s largest oil company, jumped 9.8 percent in Hong Kong after crude prices advanced and China raised the threshold for a tax on oil profits.

“Markets are a lot more comfortable with the U.S. economy at this point,” said Belinda Allen, a Sydney-based senior investment analyst at Colonial First State Global Asset Management, which oversees about $145 billion. “Europe is going to be a headwind with all the bond auctions coming up,”

The MSCI Asia Pacific Index rose 0.5 percent to 114.39 this week on rising factory activity in Australia, China, India and the U.S. and as China’s oil companies surged on market reforms and the prospect of lower taxes. The gauge pared gains at the end of the week as France faced higher borrowing costs at a bond auction and Greek Prime Minister Lucas Papademos said the country must cut spending to avoid economic collapse.

The Shanghai Composite Index slid 1.6 percent this week, extending losses for a ninth week. the longest such streak since June 2004, on concern government tightening measures are making it hard for small businesses to borrow money. The gauge rose yesterday afternoon amid renewed speculation the central bank will lower banks’ reserve-requirement ratios.

Commodity Producers

Hong Kong’s Hang Seng Index added 0.9 percent. Australia’s S&P/ASX 200 gained 1.3 percent as the better outlook for manufacturing boosted commodity producers.

Japan’s Nikkei 225 Stock Average decreased 0.8 percent this week as the euro fell to an 11-year low against the yen, clouding the earnings outlook for exporters. South Korea’s Kospi Index rose 1 percent.

Toyota Motor, which gets more than 70 percent of its revenue overseas, gained 2.9 percent to 2,638 yen in Tokyo this week. Li & Fung Ltd., the biggest supplier to Wal-Mart Stores Inc., jumped 7.4 percent to HK$15.44 in Hong Kong.

Komatsu, which counts China as its fastest-growing market, rose 1.5 percent to 1,825 yen this week in Tokyo and Murata Manufacturing Co., an electronic-parts maker that depends on China and Taiwan for almost 50 percent of its sales, climbed 1.4 percent to 4,010 yen in Osaka, Japan.

Debt Crisis

The MSCI Asia-Pacific gauge declined 17 percent last year as energy, financial and raw material companies declined amid Europe’s worsening debt crisis, U.S. lawmakers’ bickering over how to reduce that country’s deficit and China’s efforts to curb inflation. The decline dragged shares in the measure to 12 times estimated earnings, according to data compiled by Bloomberg.

Power producers led declines last year as Tokyo Electric Power Co., whose Fukushima Dai-Ichi power plant is at the center of the worst nuclear accident in 25 years, plunged more than 90 percent. Steelmakers have dragged materials companies lower amid slumping demand and as soaring Japanese and Australian currencies made their products less competitive.

This week, energy companies gained the most among the 10 industry groups of the MSCI Asian index as crude oil for February delivery rose as much as 5 percent in New York on concern that sanctions against Iran will curb supplies.

‘Big Drag’

“The bigger issues are the geopolitical crisis with Iran and the European debt crisis, pushing and pulling against the market,” said Anthony Nunan, a senior adviser for risk management at Mitsubishi Corp. in Tokyo. “People are coming back to the reality that the European crisis will still be a big drag on the economy.”

BHP Billiton Ltd., Australia’s No. 1 oil producer, advanced 2.4 percent to A$35.24 in Sydney, while Inpex Corp., Japan’s largest oil explorer by market value, added 1 percent in Tokyo.

PetroChina soared 9.8 percent to HK$10.62 this week in Hong Kong. Cnooc Ltd., the country’s largest offshore oil producer, surged 11 percent to HK$15.08.

The threshold for China’s windfall oil tax was raised to $55 a barrel from $40 effective Nov. 1, PetroChina and China Petroleum & Chemical Corp., known as Sinopec, said in statements filed to the Hong Kong stock exchange Jan. 5. The tax was introduced in March 2006. Sinopec climbed 7.8 percent through the week.

-- Editors: Nick Gentle, Paul Tighe

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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


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