Bloomberg News

Asian Stocks Gain on Europe Central Bank Bond-Buying Plan

August 07, 2012

Asian stocks rose, with the regional benchmark index headed for its highest close in three months, after Germany backed the European Central Bank’s bond-buying plan, boosting the outlook for exporters.

Esprit Holdings Ltd. (330), a clothier that counts Europe as its largest market, gained 28 percent in Hong Kong after it named a new chief executive officer. BHP Billiton Ltd., the world’s biggest miner, rose 0.5 percent in Sydney on increasing metal prices. Toshiba Corp., which makes semiconductors and parts for nuclear reactors, advanced 3.5 percent in Tokyo after it was raised to outperform at CLSA Asia Pacific Markets. Japanese utilities gained as they rebounded from last month’s plunge.

The MSCI Asia Pacific Index (MXAP) rose 0.6 percent to 119.84 as of 7:41 p.m. in Tokyo, with about five stocks rising for every two that that fell on the measure, which is headed for its highest close since May 9.

“Investors are hoping that Spain won’t request a full bailout,” said Stan Shamu, a market strategist at IG Markets Ltd. in Melbourne, a provider of trading services in stocks, bonds and commodities. “That would clear the way for the ECB to buy bonds in the secondary market. That’s still the main issue.”

Japan’s Nikkei 225 Stock Average (NKY) rose 0.9 percent, while South Korea’s Kospi Index added 0.1 percent. Australia’s S&P/ASX 200 Index advanced 0.4 percent as the nation’s central bank kept interest rates unchanged today. New Zealand’s NZX 50 Index gained 0.6 percent.

Monetary Stimulus

Singapore’s Straits Times Index (FSSTI) fell 0.1 percent, while Hong Kong’s Hang Seng Index gained 0.4 percent. China’s Shanghai Composite Index increased 0.1 percent.

The MSCI Asia Pacific Index, which includes some stocks from emerging markets, gained 9.2 percent from this year’s lowest level in June through yesterday amid speculation central banks from the U.S. to China and Europe would step up efforts to stimulate economic growth.

The benchmark index traded at 12.3 times estimated earnings, compared with 13.5 times for the Standard & Poor’s 500 Index and 11.5 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 gained 0.3 percent today. The gauge rose 0.2 percent yesterday after German Chancellor Angela Merkel’s government backed the ECB’s bond-buying plan announced last week, according to spokesman Georg Streiter.

Esprit CEO

Esprit surged 28 percent to HK$12.76 in Hong Kong. The company named Jose Manuel Martinez Gutierrez, a former manager at competitor Inditex SA, as its new chief two months after Esprit’s chairman and CEO quit.

Canon Inc., a camera maker that gets 31 percent of its revenue from Europe, rose 0.8 percent to 2,811 yen in Tokyo. Hyundai Motor Co., South Korea’s largest automaker, increased 1.3 percent to 236,500 won.

Commodity producers gained after the London Metal Exchange Index (LMEX) of prices for six industrial commodities including copper and aluminum advanced 0.7 percent yesterday.

BHP rose 0.5 percent to A$32.16. Rio Tinto Group, the world’s third-largest mining company, climbed 1.3 percent to A$54.85 in Sydney. Rio Tinto may raise its dividends this week by 34 percent, according to data compiled by Bloomberg.

Toshiba gained 3.5 percent to 269 yen in Tokyo after it was raised to outperform from cell by CLSA’s Christian Dinwoodie and Ayano Oda. The analysts cited moderating pessimism about the company’s flash memory business for the upgrade.

Japanese Utilities

About half of the top 10 gains in the MSCI Asia Pacific Index were Japanese utilities. Tohoku Electric Power Co. and Kyushu Electric Power Co. both surged 12 percent in Tokyo, while Kansai Electric Power Co. (9503) gained 10 percent.

A Japanese electric power and gas index on the Topix Index slumped 22 percent last month to its lowest level since 1982 after Kyodo News reported a fault line beneath one of Hokuriku Electric Power Co.’s reactors may be active and after tens of thousands of people rallied in Tokyo to protest against nuclear power. Hokuriku Electric gained 7.1 percent to 942 yen today.

“Investors are buying back utilities after they were sold off recently,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “It’s a temporary rally at this stage.”

Shimadzu Corp., a Japanese tool maker, slid 9.4 percent to 570 yen after lowering its full-year profit forecast by 8.7 percent to 21 billion yen.

NHN Corp. fell 3.5 percent to 262,500 won in Seoul after Mirae Asset Securities said the Internet services company’s second-quarter earnings may fall short of market expectations.

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

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


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