Bloomberg News

Most Asian Stocks Rise as Greece Election Tempers Growth Concern

June 22, 2012

Asia Stocks Wrap

An electronic stock board outside a securities firm in Tokyo on June 18, 2012. Photographer: Kiyoshi Ota/Bloomberg

Most Asian stocks rose this week after a victory by pro-bailout parties in Greece eased prospects the country will leave the euro, overshadowing concern that the global economy is slowing after reports signaled slower manufacturing in the U.S. and China.

Sony Corp. (6758), a Japanese consumer electronics exporter that gets a fifth of its sales in Europe, surged 13 percent on reports it is close to sealing alliances with Panasonic Corp. and Olympus Corp. amid speculation further gains by the yen will be limited. Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil producer, slid 3.1 percent as crude declined for a second week and the Federal Reserve cut its outlook for growth in the world’s largest economy. Evergrande Real Estate Group Ltd. (3333), China’s second-biggest developer, pared losses of as much as 20 percent as after denying allegations by a short seller that it’s insolvent.

The MSCI Asia Pacific Index ended the week little changed at 114.14, as more than two stocks rose for every one that fell. More than $5 trillion has been erased from global equities since March amid slowing economic growth in the U.S. and China, and a spreading European debt crisis that pushed Spain’s borrowing costs to a record.

‘Sigh of Relief’

The Greek election result brought a “short-term sigh of relief,” said Belinda Allen, senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “It removes the tail risk event that we were concerned about in terms of Greece leaving the European Union immediately. We all know there’s still a long and hard road ahead for Greece and the problems of Europe aren’t solved by this election.”

Japan’s Nikkei 225 Stock Average (NKY) gained 2.7 percent this week as the yen weakened against the dollar, boosting the value of earnings for exporters when repatriated. The yen fell 2.2 percent, the biggest weekly decline since February for Japan’s currency. The Topix Index climbed 3.4 percent.

Sony advanced 13 percent to 1,163 yen. Sony and Panasonic, Japan’s biggest makers of TVs, may announce an agreement next week to cooperate in making sets that use new organic light- emitting diode displays, company officials said June 22, asking not to be identified because the plan is private. The Nikkei newspaper reported Sony may invest about 50 billion yen ($624 million) to get a stake of about 10 percent in Olympus.

Canon, Honda

Canon Inc., the country’s No.1 camera maker, added 1.7 percent to 3,250 yen. Honda Motor Co. (7267), Japan’s second-largest carmaker by market value, rose 6 percent to 2,686 yen.

Australia’s S&P/ASX 200 Index lost 0.2 percent this week and South Korea’s Kospi slid 0.6 percent.

Greek’s Prime Minister Antonis Samaras held his first Cabinet meeting June 20 after his New Democracy party won Greece’s general election on June 17 on pledges to renegotiate parts of a 130 billion-euro ($163 billion) second bailout from the European Union and International Monetary Fund while keeping Greece in the euro.

Hong Kong’s Hang Seng Index slid 1.2 percent this week as a survey by HSBC Holdings Plc and Markit Economics showed China’s manufacturing may shrink for an eighth month.

‘Getting Worse’

In the U.S., the Fed cut its estimates for growth and said it sees little progress on unemployment during the rest of the year. The Fed will expand its Operation Twist program to replace short-term bonds with longer-term debt by $267 billion through the end of 2012. Reports showed manufacturing in the Philadelphia region shrank to the lowest level since August and sales of previously owned homes fell in May.

“Things are still getting worse,” said Peter Elston, Singapore-based head of Asia-Pacific strategy at Aberdeen Asset Management Plc, which oversees about $270 billion. “When you have an essentially weak private sector, you’re relying on the government to step in and support things. You’re seeing a gradual weakening of the ability of governments to step in.”

Exporters to the U.S. and China declined. Samsung Electronics (005930) fell 2.9 percent to 1.182 million won in Seoul. Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., sank 4.7 percent to HK$14.48 in Hong Kong.

BHP Billiton Ltd., the world’s largest mining company, fell 1 percent to A$31.52. Woodside Petroleum Ltd., Australia’s second-biggest oil producer, slid 3.1 percent to A$31.36 as crude declined for a second week. Cnooc Ltd., China’s biggest offshore oil producer, sank 5.4 percent to HK$14.38.

Evergrande lost 17 percent to HK$3.83. The Chinese real- estate developer denied allegations by short-seller Citron Research that it used “accounting tricks and bribes” to hide that it’s insolvent, in a statement to the Hong Kong exchange.

The MSCI Asia-Pacific (MXAP) slumped more than 11 percent from its peak on Feb. 29 through June 22, dragging shares on the index to 1.23 times book value. That compares with 2.1 times for the S&P 500 and 1.35 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.

To contact the reporter on this story: 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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