Bloomberg News

Asian Stocks Maintain Gains Amid Stalemate Over Greek Bonds

January 24, 2012

Jan. 24 (Bloomberg) -- Asia’s benchmark stock index rose for a sixth day, edging up even after optimism that European policymakers were making progress on the debt crisis was damped by a stalemate with Greek bondholders.

Nintendo Co., a Japanese maker of video-game consoles that gets 34 percent of its sales in Europe, rose 1.5 percent in Tokyo after the euro rose against the yen. Elpida Memory Inc. advanced 4.6 percent on a report the Japanese chipmaker is in merger talks. State Bank of India, the nation’s biggest lender, advanced 5.2 percent in Mumbai after the central bank unexpectedly cut lenders’ reserve ratios.

The MSCI Asia Pacific Index rose 0.1 percent to 121.09 as of 5:18 p.m. in Tokyo after swinging between gains and losses at least eight times. The six-day run is the gauge’s longest winning streak since early December. Seven of the measure’s 10 industry groups advanced.

“After such a big run up in the last month or so, it wouldn’t surprise me to see markets correct a little bit,” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management, said in a Bloomberg Television interview. “There’s still a lot of uncertainty around Europe and the Greek restructuring issue is still to be resolved.”

Japan’s Nikkei 225 Stock Average rose 0.2 percent even after the Bank of Japan cut its national growth outlook. Australia’s S&P/ASX 200 was little changed. The BSE India Sensitive Index advanced 1.5 percent to a two-month high.

Stock markets in China, Hong Kong and South Korea and Singapore were shut for the Lunar New Year holiday.

Greece Talks

Futures on the Standard & Poor’s 500 Index slid 0.5 percent today. The gauge added 0.1 percent in New York yesterday after Germany and France said talks between Greece and bondholders were making progress. The euro rose 0.6 percent to 100.25 yen yesterday. A strong euro boosts the value of Asian exporters’ earnings overseas.

Nintendo gained 1.5 percent to 10,760 yen. Canon Inc., a Japanese camera maker that generates about a third of its revenue in Europe, rose 0.6 percent to 3,410 yen.

“The market has gotten used to developments in Europe, and investors are expecting things won’t get worse after they priced in negative factors,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $30 billion. “The euro’s rebound against the yen is contributing to a buyback in shares. The question is how long it will last.”

Call for Relief

Gains in stocks were limited as European finance ministers balked at putting up more public money for Greece, calling on bondholders to provide greater debt relief to help ease the way out of the crisis.

Nippon Sheet Glass Co., the company on the Nikkei 225 that gets the highest percentage of revenue generated in Europe, slumped 1.9 percent to 153 yen.

State Bank of India gained 5.2 percent to 2,040.8 rupees after the central bank cut the amount of deposits lenders need to keep in reserve for the first time since 2009 and signaled future interest-rate cuts. Larsen & Toubro Ltd., the nation’s largest engineering company, gained 5.8 percent to 1,351.9 rupees, the steepest gain in 11 months.

“The rally may sustain because the massive gap between last year’s outperformers, like consumer goods and health care stocks, and underperformers, like capital goods, metals and real estate companies, has to be bridged,” Sadanand Shetty, senior fund manager at Taurus Asset Management Co., which has about $921 million in assets, said by phone from Mumbai. The cut in the reserve ratio may be followed by a reduction in interest rates in the next policy review, he said.

Elpida, Mirabela

The MSCI Asia Pacific Index gained 6.3 percent this year through yesterday, compared with gains of 4.6 percent by the S&P 500 and 5.1 percent by the Stoxx Europe 600 Index. Shares in the Asian benchmark are valued at 1.3 times book value. That compares with 2.1 times for the Standard & Poor’s 500 Index in the U.S. and 1.4 times for the Europe Stoxx 600 Index.

Elpida Memory Inc. advanced 4.6 percent to 367 yen after a report the chipmaker is in merger talks with Micron Technology Inc. and Nanya Technology Corp., the Yomiuri newspaper said, without citing a source. The paper also reported Elpida needs 92 billion yen ($1.2 billion) to repay loans and bonds due as early as March. The chipmaker dismissed the report.

Mirabela Nickel Ltd. slid 13 percent to A$1.055, the miner’s biggest drop in almost three years. Analysts cut their recommendations on the nickel producer after production costs rose at its mine in Brazil.

--With assistance from Rajhkumar K Shaaw in Mumbai. Editors: Jim Powell, Ravil Shirodkar

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net


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