Bloomberg News

Asia Stocks Rise, Ending 5 Weeks of Losses on Stimulus Optimism

June 08, 2012

Asian stocks rose this week, ending a five-week streak of declines, as global policy makers in the U.S., Europe and China signaled they would take steps to stimulate growth. Shares pared gains yesterday amid concern China’s economy is slowing.

HSBC Holdings Plc (5), a lender that gets about a fifth of its revenue from North America, rose 3.5 percent in Hong Kong. Gree Inc. (3632), a Japanese social networking site, surged 21 percent in Tokyo after announcing a new game. Qantas Airways Ltd. (QAN), Australia’s largest carrier, slumped 34 percent in Sydney after forecasting a full-year loss.

The MSCI Asia Pacific Index rose 0.1 percent to 111.50 this week, ending its longest weekly losing streak since June 2011. The gauge has tumbled 14 percent from this year’s high on Feb. 29 amid concern Europe’s debt crisis is worsening and signs China’s economy is slowing. Stocks on the index were valued at about 11.3 times estimated earnings on average, compared with 12.7 times for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

“We are likely to see a reasonably strong policy response in a number of countries,” said Angus Gluskie, managing director at White Funds Management in Sydney who manages more than $350 million. “It’s stacking up to be a reasonably good buying opportunity.”

Topix’s Low

Japan’s Nikkei 225 Stock Average (NKY) gained 0.2 percent this week, while the Topix Index rose 1.2 percent, rebounding after the gauge plunged to its lowest level since 1983 and entered a bear market on disappointing U.S. jobs and China services data.

Hong Kong’s Hang Seng Index (HSI) slid 0.3 percent, while China’s Shanghai Composite Index retreated 3.9 percent. Taiwan’s Taiex Index lost 1.5 percent, while South Korea’s Kospi Index rose 0.1 percent.

Australia’s S&P/ASX 200 was little changed even after a report the nation’s economy expanded twice as fast as economists estimated in the first quarter from the previous three months.

Asian shares declined on the first trading day this week after reports showed China’s non-manufacturing industries expanded at the slowest pace in more than a year and U.S. hiring missed even the most-pessimistic forecast. The jobless rate rose to 8.2 percent and manufacturing index retreated from a 10-month high.

The Asian gauge rallied the next three days as disappointing economic data and signals from global policy makers added to speculation that fresh stimulus measures would be introduced to support growth.

ECB Ready

European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s growth outlook worsens. Federal Reserve Vice Chairman Janet Yellen said the U.S. economy “remains vulnerable to setbacks” and may warrant additional monetary stimulus. Dennis Lockhart, president of the Fed’s Atlanta bank, said extending Operation Twist, a policy of buying longer-term bonds, is an “option on the table.”

HSBC rose 3.5 percent to HK$63 in Hong Kong. Samsung Electronics Co. (005930), a consumer-electronics maker that gets more than a third of sales from Europe and the Americas, advanced 1.1 percent to 1.247 million won in Seoul. James Hardie Industries SE (JHX), a supplier of building materials the counts the U.S. as its largest market, climbed 2.1 percent to A$7.40 in Sydney.

“There may be fatigue in being bearish,” said Yoji Takeda, who oversees $1.1 billion at RBC Investment Management (Asia) Ltd. in Hong Kong. “Stocks look very cheap because they’ve been sold down.”

China Easing

Shares in the region pared gains yesterday after China cut borrowing costs and relaxed controls on bank lending and deposit rates. The announcement came before the release of data today that may show China’s fixed-asset investment expanded at the slowest pace in a decade in May, inflation matched a two-year low and industrial output grew less than 10 percent for a second month.

“Growth worries could weigh on market sentiment,” Lu Ting, an economist at Bank of America Corp., wrote in a report before the release of the data. The timing of China’s interest-rate cut suggests that economic data for May may be worse than expected, he said.

Federal Reserve Chairman Ben S. Bernanke damped expectations for monetary stimulus later in the week, after saying the Fed will need to assess conditions before deciding if more measures are required to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts.

Gree surged 21 percent to 1,363 yen this week in Tokyo, the biggest gain on the MSCI Asia Pacific Index (MXAP), after saying it was offering a version of PopCap Games’ hit title Bejeweled customized for the Japanese market.

Qantas Airways tumbled 34 percent to 97 Australian cents this week in Sydney, wiping out at least $1 billion of market value, after saying full-year profit may fall as much as 91 percent because of losses on overseas routes and higher fuel costs.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net.

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


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