Bloomberg News

Asian Stocks Advance as China Moves to Ease Cash Crunch

August 21, 2012

Asian Stocks Advance Before U.S. Housing, Durable Goods Data

The Woodside Petroleum Ltd. logo is displayed atop the company's headquarters in Perth. Photographer: Ron D'Raine/Bloomberg

Asian stocks rose, with the regional benchmark index heading for a three-month high, as China moved to alleviate a cash crunch and ahead of U.S. reports that are expected to show the world’s biggest economy is improving.

Taiwan Semiconductor Manufacturing Co. (2330), the world’s biggest contract manufacturer of computer chips, gained 1.5 percent in Taipei. Asia Pacific Breweries Ltd. jumped 4.8 percent in Singapore after Heineken NV raised its offer for a controlling stake in the maker of Tiger beer. PICC Property & Casualty Co. advanced 7.3 percent in Hong Kong after China’s biggest non-life insurer posted higher first-half earnings.

The MSCI Asia Pacific Index (MXAP) added 0.4 percent to 121.20 as of 7:36 p.m. in Tokyo, heading for its highest close since May 8. About 10 shares rose for every seven that fell in the gauge. The measure advanced in the past three weeks on expectations China will ease monetary policy and amid signs the U.S. economy is strengthening.

“U.S. economic data has been better, with the housing sector turning around,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion in assets. “Eventually, Asian exports will rebound. Asian equities aren’t overvalued after recent gains and Chinese equities are dirt cheap. China’s economic slowdown remains a key concern.”

Cash Injection

China’s central bank stepped up reverse-repurchase operations today to ease a cash crunch, injecting 150 billion yuan ($24 billion) using seven-day contracts and a further 70 billion yuan via 14-day agreements, according to a trader at a primary dealer required to bid at the auctions. That’s the biggest injection since July 3.

Taiwan’s Taiex Index climbed 1 percent and China’s Shanghai Composite Index (SHCOMP) added 0.5 percent. Hong Kong’s Hang Seng Index was little changed while the Hang Seng China Enterprises Index of mainland companies listed in the city rose 0.3 percent.

Australia’s S&P/ASX 200 Index gained 0.4 percent. The nation’s central bank signaled confidence domestic growth would weather a “fragile” global economy in its decision to maintain the highest borrowing costs in the developed world, according to minutes of the Aug. 7 policy meeting released today.

Japan’s Nikkei 225 Stock Average and South Korea’s Kospi Index both dropped 0.2 percent. Singapore’s Straits Times Index gained 0.1 percent.

U.S. Reports

Reports in the U.S. this week will show that combined purchases of new and existing houses increased to a 4.89 million annual rate in July from 4.72 million in June, according to the median forecast in surveys of economists before releases from the National Association of Realtors tomorrow and the Commerce Department the next day. Bookings for long-lasting goods may have climbed the most this year, a release will show Aug. 24, according to economist estimates.

Asian exporters gained. TSMC, as the chip maker is known, gained 1.5 percent to NT$83.60 in Taipei. Toyota Motor Corp., the world’s biggest carmaker, added 0.5 percent to 3,260 yen in Tokyo. Nintendo Co., the maker of Wii game consoles, increased 1.3 percent to 8,880 yen.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The underlying gauge yesterday closed little changed at 1,418.13. Trading volume and volatility have dropped this month as traders await policy clues from the Federal Reserve’s summit at the end of the month and a European Central Bank meeting in September.

‘Significant Risks’

Government bond purchases “entail significant stability risks,” Germany’s Bundesbank said in its monthly report yesterday. The ECB’s governing council may decide at its next gathering to set yield limits on each country’s debt, Germany’s Spiegel magazine reported Aug. 19, without saying where it got the information. The ECB council hasn’t discussed any plan to target the bond yields, a central bank spokesman said in an e- mailed statement.

Hon Hai Precision Industry Co. (2317) gained 1.3 percent to NT$85.90 and Foxconn Technology Co. added 1 percent to NT$114.50 in Taipei. Both companies are assemblers for Apple Inc., which set a U.S. record for market value yesterday on optimism the next version of the iPhone will meet high demand.

Asia Pacific Breweries climbed 4.8 percent to S$53 in Singapore after Heineken boosted its bid for Fraser & Neave Ltd.’s stake in the Southeast Asian brewer to S$5.6 billion ($4.5 billion). Trading in the shares was halted on Aug. 17 before announcements on the bid, and the city’s stock market was closed yesterday.

Company Profits

AU Optronics Corp. increased 4.4 percent to NT$9.41 in Taipei. Sony Corp. is giving part of its television orders to a unit of the Taiwanese maker of liquid-crystal displays, the Economic Daily reported, citing market speculation. AU Optronics spokeswoman Yawen Hsiao said the company doesn’t comment on client orders

PICC Property & Casualty jumped 7.3 percent to HK$9.44. First-half net income climbed 24 percent from a year earlier to 6.53 billion yuan ($1 billion), the Beijing-based insurer said in a statement to the Hong Kong stock exchange yesterday.

Of the 446 companies in the Asia-Pacific index that have reported quarterly earnings since July 1, and for which Bloomberg has estimates, about 55 percent have failed to meet projections, according to data compiled by Bloomberg.

Cnooc Ltd. declined 3 percent to HK$15.10. China’s biggest offshore oil and gas explorer reported first-half profit dropped 19 percent from a year earlier to 31.87 billion yuan after output was curbed by the closure of its largest domestic oilfield.

The MSCI Asia Pacific Index retreated 6.4 percent from a Feb. 29 high through yesterday amid concern China’s economy is slowing and Europe’s debt crisis is deepening. Stocks on the measure were valued at 12.6 times estimated earnings on average, compared with 13.7 times for the Standard & Poor’s 500 Index and 11.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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


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