Bloomberg News

Asian Stocks Advance Most This Year After Bernanke Speech

March 27, 2012

Asian stocks rose by the most this year after Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed and a report showed German business confidence unexpectedly gained, improving the earnings outlook for Asian exporters.

Honda Motor Co. (7267), a Japanese carmaker that gets 83 percent of its sales abroad, added 3.5 percent as the Nikkei 225 Stock Average erased losses since last year’s earthquake. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender by market value, added 2.5 percent after German Chancellor Angela Merkel signaled she stands ready to do more to tame Europe’s debt crisis. Korea Gas Corp. (036460), the world’s biggest liquefied natural gas importer, jumped 11 percent in Seoul after its Italian partner found reserves in Mozambique.

The MSCI Asia Pacific Index gained 1.9 percent, the most since Dec. 21, to 128.13 as of 8:38 p.m. in Tokyo, paring its monthly loss to 0.7 percent. The measure added 12 percent this year through yesterday, headed for the biggest rally since the third quarter in 2010.

Fed policy makers “still have an option of doing more, but I think it was just reinforcing the view that they are not going to reverse policy quickly,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “There’s going to be a lot of liquidity provided for the market and economy. Obviously equity investors are taking it in a positive way.”

Quake Losses Erased

Japan’s Nikkei 225 gained 2.4 percent with a late surge causing it to finish above the closing level on March 11, 2011, when a record earthquake and tsunami hit the nation. Trading volume of stocks in the benchmark equity measure was 3.4 percent below the average for the time of day over the past 30 trading sessions.

The MSCI Asia Pacific excluding Japan Index gained 1.6 percent, the most since Jan. 17.

South Korea’s Kospi Index rose 1 percent as the nation’s central bank said consumer confidence climbed this month to the highest level in four months.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 0.2 percent after the government reported Chinese industrial companies had their first January- February profit decline since 2009. Australia’s S&P/ASX 200 added 0.9 percent. Hong Kong’s Hang Seng Index climbed 1.9 percent.

Volatility across the region fell. The HSI Volatility Index (VHSI) dropped 8.9 percent to 18.87, the lowest since Aug. 1, indicating options traders expect a swing of 5.4 percent in the benchmark over the next 30 days. Gauges of anticipated price movements for Japan’s Nikkei 225 and Korea’s Kospi 200 Index (VKOSPI) also retreated.

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The index added 1.4 percent in New York yesterday to close at the highest level since May 2008 after Bernanke said that while he is encouraged by a drop in the unemployment rate, the Fed needs to continue accommodative monetary policy to make further progress.

Exporters Gain

Asian exporters gained. Honda advanced 3.5 percent to 3,270 yen. Billabong International Ltd. (BBG), a surfwear maker that gets about 50 percent of revenue from the Americas, rose 5.2 percent to A$2.84. Samsung Electronics Co. (005930), South Korea’s biggest exporter of consumer electronics, rose 2.8 percent to 1.311 million won.

The MSCI Asia Pacific Index gained 10 percent this year through yesterday on optimism the U.S. economy is recovering and monetary policy easing from China to Japan and Europe will bolster growth. That’s boosted the value of stocks listed in the index to 15 times estimated earnings on average, compared with 13.6 times for the S&P 500 and 11.2 times for the Stoxx Europe 600.

Stocks also rose after the Munich-based Ifo institute said its German business climate index, based on a survey of 7,000 executives, increased to 109.8 from a revised 109.7 in February. Economists forecast it would remain unchanged at the initial February reading of 109.6, according to the median of estimates in a Bloomberg News survey.

‘German Commitment’

Financial firms gave the biggest boost to the Asia-Pacific index’s advance after German Chancellor Merkel gave her first indication that she is prepared to allow an increase in the debt-crisis firewall, saying that Germany could let the temporary and permanent rescue funds run in parallel.

“German chancellor is reinforcing the German commitment to keeping the euro area together and providing finances as they are required,” Colonial’s Halmarick said. “There are some signs other countries may be struggling under the fiscal requirements.”

Sumitomo Mitsui climbed 2.5 percent to 2,878 yen. Australia & New Zealand Banking Group Ltd. (ANZ), Australia’s third-largest lender, rose 1.6 percent to A$23.18. HSBC Holdings Plc (HSBA), Europe’s biggest lender, gained 2.3 percent to HK$70.40 in Hong Kong.

Korea Gas jumped 11 percent to 42,950 won after its partner Eni SpA, Italy’s largest oil company, said yesterday it found reserves in Mozambique that increase the resource base there by 10 trillion cubic feet.

Among stocks that fell, Far East Horizon Ltd. slumped 9.8 percent to HK$6.35 as it plans to sell 450 million new shares.

Stockland (SGP), Australia’s third-biggest property trust by market value, slid 4.5 percent to A$3 after cutting its full- year earnings forecast.

Of 641 companies listed in the Asia-Pacific measure that have reported earnings since Jan. 9, more than half have missed analysts’ estimates, according to data compiled by Bloomberg.

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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