Bloomberg News

Asian Stocks Gain as China, U.S. Temper Europe Concern

June 27, 2012

Asian stocks rose, snapping a four- day decline, as speculation the U.S. housing market is bottoming and China may step up economic stimulus tempered concern that the 19th summit on Europe’s debt crisis in three years won’t result in progress toward a resolution.

China Overseas Land & Investment Ltd. (688), the biggest Chinese developer by market value listed in Hong Kong, climbed 4.3 percent. Techtronic Industries Ltd., which makes 72 percent of its sales in North America, gained 2.6 percent in Hong Kong. Oracle Corp. Japan climbed the most in three months in Tokyo as its profit forecast topped estimates.

The MSCI Asia Pacific Index (MXAP) advanced 0.8 percent to 114.19 at 8:13 p.m. in Tokyo after retreating 3 percent in the previous four days. The gauge fell 0.5 percent this year through yesterday amid concern that growth in the U.S. and China is slowing as Europe’s debt crisis spreads.

“Markets have already priced in a lot of the bad news,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “All you need for a rally in equities is for the backdrop to become less bad. When the housing sector improves it has a strong trickle-down effect to the wider U.S. economy. But there’s still a struggle with what’s going on in Europe.”

The decline in MSCI’s Asian gauge this year compares with a gain of 5 percent by the Standard & Poor’s 500 Index and the Stoxx Europe 600 Index’s drop of 0.8 percent. The MSCI Asia Pacific Index trades at 11.5 times estimated profit, versus 12.7 times for the S&P 500 and the Stoxx 600’s 10.2 multiple.

Hong Kong’s Hang Seng Index (HSI) rose 1 percent, while Japan’s Nikkei 225 Stock Average advanced 0.8 percent. South Korea’s Kospi Index slid less than 0.1 percent, all but erasing an earlier decline of 1.3 percent. Australia’s S&P/ASX 200 Index gained 0.7 percent.

U.S. Stocks

German Chancellor Angela Merkel and French President Francois Hollande are due to meet today before the European Union starts a two-day summit in Brussels tomorrow. France and Italy are urging Germany to help end the debt crisis.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The underlying index gained 0.5 percent yesterday after data showed house prices decreased at the slowest pace since 2010. The report tempered concern over a drop in the Conference Board’s consumer confidence index to a five-month low.

Techtronic Industries climbed 2.6 percent to HK$9.54. Semiconductor Manufacturing International Corp., which makes more than half of its sales in the U.S., gained 0.4 percent to 24.8 Hong Kong cents.

The MSCI Asia Pacific retreated 12 percent through yesterday from this year’s high on Feb. 29 and dropped 11 percent since the end of March, heading for its first quarterly drop since September.

China Stimulus

China may introduce “more proactive” policies to ensure stable growth, according to a commentary in the China Securities Journal by reporter Zhang Zhaohui. The government may expand infrastructure investment, fine-tune monetary policies and reduce taxes, according to the commentary, which was published on the front page of the newspaper.

Chinese property developers advanced. China Overseas Land gained 4.3 percent to HK$17.94, China Resources Land Ltd. (1109) advanced 4.9 percent to HK$15.56 and Guangzhou R&F Properties Ltd. rose 1.6 percent to HK$10.26.

China will seek to strengthen ties with Hong Kong by promoting tie-ups between the two financial markets and increasing cooperation in investments overseas and infrastructure, the official Xinhua News Agency said today. The 15th anniversary of Hong Kong’s return to China is on July 1.

Oracle Japan advanced 3.6 percent to 3,165 yen, the most since March, on trading volume that was almost 250 percent of its five-day average. The company also increased its full-year dividend forecast 4.2 percent to 75 yen.

Boral Slides

Chow Tai Fook Jewellery Group Ltd. (1929), a Hong Kong-based chain with more revenue than Tiffany & Co., climbed 6.4 percent to HK$9.81 after posting higher full-year profit.

Glencore International Plc fell 3 percent to HK$36.25. The stock touched the lowest price since the company first sold shares in May last year. Qatar Holding LLC, Xstrata Plc’s second-largest shareholder, asked Glencore to raise its offer for Xstrata.

Boral Ltd. (BLD), the Australian seller of building materials, slumped 1.9 percent to A$3.13, a seventh straight day of declines to its lowest since March 2009, after cutting its profit forecast.

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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