Bloomberg News

Asia Stocks Rise to 6-Month High on China Pledge to Help Europe

February 15, 2012

Feb. 15 (Bloomberg) -- Asian stocks rose, with the region’s benchmark index headed toward a six-month high, after China pledged to help resolve Europe’s debt crisis. Chipmakers outside Japan rallied as Elpida Memory Inc. said its inability to meet its debts may mean it cannot survive.

Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, added 3.5 percent in Hong Kong. Samsung Electronics Co. and Hynix Semiconductor Inc. advanced as Elpida touched its lowest price in at least eight years. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, advanced 4.6 percent following the Bank of Japan’s expansion of its asset- purchase program. Westfield Group, a shopping mall operator, climbed 5.3 percent in Sydney after reporting its second-half profit jumped five-fold as property management and project income increased.

The MSCI Asia Pacific Index gained 1.6 percent to 127.08 as of 1:43 p.m. in Tokyo, set for the highest close since Aug. 4. All 10 industry groups on the measure advanced.

“The BOJ took stronger action than expected, and overseas investors seem to like it,” said Takeru Ogihara, chief strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-largest lender by market value. “Greece will buy time with a second bailout and avoid default, and the markets have been pricing that in.”

Asian stocks extended gains as People’s Bank of China Governor Zhou Xiaochuan said China is ready to be more involved in resolving the European crisis through the European Financial Stability Facility and European Stability Mechanism.

Greece Bailout

The leaders of Greece’s two biggest political parties, New Democracy’s Antonis Samaras and Pasok’s George Papandreou, will send written commitments today to the so-called troika to stand by austerity measures, a government official said yesterday. The assurance to the troika -- the International Monetary Fund, European Commission and European Central Bank -- was a condition of a 130 billion euro ($171 billion) bailout.

Cosco Pacific added 3.5 percent to HK$12.52 in Hong Kong. Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, rose 1.7 percent to HK$14.74.

Japan’s Nikkei 225 Stock Average advanced 2.5 percent. The MSCI Asia Pacific excluding Japan Index gained 1.3 percent. Australia’s S&P/ASX 200 rose 0.1 percent, while South Korea’s Kospi Index increased 1.1 percent.

Hong Kong’s Hang Seng Index added 2 percent and the Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 0.9 percent, reversing an earlier loss. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 2.2 percent following Zhou’s comments. China Railway Construction Corp. rose 6.6 percent to HK$5.97 after winning $1.45 billion contracts.

China’s Support

Futures on the Standard & Poor’s 500 Index advanced 0.5 percent today. The index lost 0.1 percent in New York yesterday, paring an earlier decline of as much as 0.8 percent as U.S. retail sales trailed estimates after sales of automobiles unexpectedly declined.

Elpida slumped 14 percent to 322 yen after saying it saw “uncertainty” over remaining in business because it hasn’t secured financing. The company, which reported 311.7 billion yen revenue in the 12 months to Dec. 31, has 210.8 billion yen of debt maturing this year, according to data compiled by Bloomberg. The shares earlier touched their lowest level since at least November 2004.

South Korean and Taiwanese competitors rose. Samsung Electronics, South Korea’s biggest exporter of consumer electronics, rose 5.2 percent to 1.14 million won. Samsung may separate its liquid-crystal-display business, the Electronics Times reported today. Hynix Semiconductor, a maker of semiconductors such as dynamic random access memory, gained 5.3 percent to 29,000 won.

Less Competition

“Investors appear to be betting that the possible failure of Elpida will mean less competition in the industry, reducing the number of players and production capacity,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. “I don’t think Elpida is in an extremely dire situation. Rather, they’re trying to put pressure to get needed support.”

Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer of chips, rose 1.2 percent to NT$78.20 in Taipei.

Japanese shares extended yesterday’s gains after the yen touched 78.66 per dollar today, the lowest level since Nov. 1. Mitsubishi UFJ Financial gained 4.6 percent to 410 yen. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender by market value, rose 4.2 percent to 2,709 yen.

Asian Profit

Westfield gained 5.3 percent to A$8.81 in Sydney after reporting a fivefold jump in second-half profit. It also said it will initiate a buyback for as much as 10 percent of issued capital.

Of the 449 companies listed on the MSCI Asia Pacific Index that have reported earnings since Jan. 9, more than half missed analysts’ estimates, according to data compiled by Bloomberg.

The Asia Pacific index gained 9.8 percent this year through yesterday, compared with a 7.4 percent advance by the S&P 500 and a 7.4 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14.1 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.9 times for the Stoxx 600.

-- Editors: Nick Gentle, John McCluskey

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


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