Asian Stocks Rise on Lower French Borrowing Cost, China Outlook
January 17, 2012, 7:47 PM ESTBy Yoshiaki Nohara
Jan. 17 (Bloomberg) -- Asian stocks rose, erasing yesterday’s losses, after French borrowing costs fell and the slowest Chinese growth in 10 quarters added to speculation about monetary-policy easing in the world’s No. 2 economy.
HSBC Holdings Plc, Europe’s biggest lender, climbed 1.8 percent after France sold debt at a lower cost even after its credit rating was cut. Country Garden Holdings Co., a real estate developer, increased 4.5 percent in Hong Kong after China’s economic growth slowed less than expected. Sumitomo Mitsui Financial Group Inc., Japan’s No. 2 publicly traded bank, advanced 1.1 percent after it won a bid to buy Royal Bank of Scotland Group Plc’s aircraft-leasing unit.
The MSCI Asia Pacific Index gained 1.3 percent to 117.19 as of 12:50 p.m. in Tokyo, erasing a 1.1 percent decline yesterday, the biggest since Dec. 19. More than four stocks rose for each that fell on the gauge. European Central Bank President Mario Draghi yesterday said loans offered last month to the region’s banks helped avoid “a major credit crunch.”
“It does seem like markets are taking a glass-half-full view of Europe and they seemed to be very impressed by the liquidity that’s coming out of” the ECB, said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion. “Anecdotally, we are hearing China’s senior leadership is very, very concerned about the outlook in Europe, which tells you the bias is to ease policy more than they have already.”
French Debt Sale
Japan’s Nikkei 225 Stock Average rose 0.6 percent, and Australia’s S&P/ASX 200 advanced 1.4 percent. Hong Kong’s Hang Seng Index advanced 1.8 percent. South Korea’s Kospi Index gained 1.6 percent as Mirae Asset Securities Co. led brokerages higher.
Futures on the Standard & Poor’s 500 Index rose 0.4 percent today after U.S. markets were closed yesterday for a holiday. The Stoxx Europe 600 Index climbed 0.8 percent yesterday, snapping a three-day loss, as French borrowing costs fell at the country’s first debt auction since Standard Poor’s cut its credit rating last week.
Financial companies contributed the most to the gains in the MSCI Asia Pacific Index amid optimism Europe’s debt crisis won’t throw the global financial system into disarray. HSBC rose 1.8 percent to HK$60.7. Westpac Banking Corp., Australia’s No. 2 lender by market value, advanced 1.2 percent to A$20.61.
The MSCI Asia Pacific Index advanced 1.6 percent this year through yesterday, compared with a 2.5 percent gain by the S&P 500 and a 2.7 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10.1 times for the Stoxx 600.
Korean Brokerages
In South Korea, Mirae Asset Securities gained 10 percent to 35,000 won, the biggest increase on the Asia-Pacific gauge. Samsung Securities Co. added 6.5 percent to 53,900 won, and Shinhan Financial Group Ltd. climbed 5.8 percent to 41,050 won. Hyundai Securities Co. rose 5.6 percent to 9,550 won.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, climbed 0.9 percent. China’s gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing today. That compared with the 8.7 percent median forecast in a Bloomberg News survey and was down from a 9.1 percent expansion in the previous quarter.
“They are more likely to cut the reserve ratio for banks to provide more liquidity,” said Cedric Ma, Hong Kong-based senior investment strategist at Convoy Asset Management Ltd., which oversees about $200 million. “There will still be more easing even though it may not become an interest-rate reduction. China is right now focusing on saving the economy rather than on the market.”
Agile Property
Chinese developers rose in Hong Kong. Country Garden jumped 4.5 percent to HK$3.27, and Agile Property Holdings Ltd. added 3.4 percent to HK$7.96.
Sumitomo Mitsui Financial Group climbed 1.1 percent to 2,219 yen after it won a bid to purchase Royal Bank of Scotland Group’s aircraft-leasing division for about $7.3 billion. Sumitomo Mitsui beat competing offers from China Development Bank Corp. and Wells Fargo & Co. for the assets, which RBS is selling as it reverses a decade of expansion.
--Editors: Nick Gentle, John McCluskey
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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.
