Bloomberg News

Asia Stocks Rise This Week on U.S. Economic Data, Draghi Pledge

October 05, 2012

Asian stocks rose this week on signs a U.S. recovery is taking hold and after European Central Bank President Mario Draghi said the bank stands ready to buy bonds to ease the debt crisis.

Nintendo Co. rose 12 percent in Osaka on a Forbes report that pre-orders for its Wii U gaming console have sold out. Arrium Ltd. (ARI), an Australian iron ore producer, surged 47 percent in Sydney after rejecting a $1 billion offer from Noble Group Ltd. and some South Korean investors. Sands China Ltd. (1928), the Asian unit of Sheldon Adelson’s Las Vegas gaming company, dropped 3.6 percent in Hong Kong after Macau casino revenue missed analyst estimates.

The MSCI Asia Pacific Index (MXAP) rose 0.1 percent to 122.64 this week, ending two weeks of declines. Shares rose on speculation U.S. employment and services data would beat estimates.

“At the moment, the market is telling us there won’t be an additional blowup or crisis in Europe in the near term,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which manages about $1 billion. “Equity markets are turning up. It almost doesn’t matter which market you look at.”

Stocks on Asia’s benchmark index were valued at 12.8 times estimated earnings on average, compared with 13.9 times for the Standard & Poor’s 500 Index and 12.2 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japan’s Nikkei 225 Stock Average (NKY) dropped 0.1 percent as the Bank of Japan yesterday maintained its asset purchase plan at 55 trillion yen ($702 billion) even as the economy minister sat in on the meeting to add pressure for more easing.

Taiwan’s Taiex Index decreased 0.3 percent.

Hong Kong’s Hang Seng Index (HSI) gained 0.8 percent and South Korea’s Kospi Index dropped less than 0.1 percent in a week that was shortened by holidays. Markets in China were shut all week.

Australia Rates

Australia’s S&P/ASX 200 Index climbed 2.5 percent after the nation’s central bank cut its benchmark interest rate to the lowest level since 2009 amid a deepening global slowdown.

In India, trading in the S&P CNX Nifty Index (NIFTY) and some individual companies were halted for 15 minutes yesterday after the 50-stock measure plunged as much as 16 percent. The National Stock Exchange of India said it is probing a “freak” trade that caused the slump.

In the U.S., data from ADP Employer Services on Oct. 3 showed private payrolls increased by 162,000 last month, more than economists estimated. Service industries expanded more than forecast in September. Shares also rose this week after Federal Reserve Chairman Ben S. Bernanke renewed a pledge to sustain record stimulus.

After close of market, data released in the U.S. showed unemployment unexpectedly fell to 7.8 percent in September, compared with the median estimate for a rise to 8.2 percent by economists, according to a Bloomberg survey.

ECB Pledge

In Europe, ECB President Mario Draghi said on Oct. 4 the central bank is ready to start buying government bonds of indebted euro nations as soon as the necessary conditions are fulfilled. The ECB kept its benchmark interest rate unchanged at a historic low of 0.75 percent.

Esprit Holdings Ltd., a clothier that counts Europe as its largest market, gained 8.7 percent to HK$12.96 this week in Hong Kong. James Hardie Industries SE (JHX), a building-materials supplier that depends on the U.S. for more than two-thirds of its revenue, rose 5.1 percent to A$9.14 in Sydney.

Nintendo jumped 12 percent to 11,110 yen this week in Osaka. The shares rose after Forbes reported on Sept. 30 that pre-order options for its Wii U console from some U.S. retailers sold out ahead of its Nov. 18 release.

EAccess Ltd. (9427) a telecom that is being bought by Softbank Corp., surged more than threefold to 47,000 yen in Tokyo after the trading limit on the stock was lifted. Softbank said on Oct. 1 it will acquire eAccess for $2.3 billion, three times the company’s market value at the time.

Arrium Soars

Arrium jumped 47 percent to 80 Australian cents this week in Sydney after rejecting an offer from Noble Group and South Korean investors, saying the bid was too low and conditional.

In China, services industries expanded at the weakest pace since at least March 2011 as officials struggle to reverse a slowdown in the world’s second-biggest economy. The purchasing managers’ index fell to 53.7 from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing on Oct. 3.

Among stocks that fell, Sands China fell 3.6 percent to HK$28.05 this week in Hong Kong, while Wynn Macau Ltd. (1128) fell 0.5 percent to HK$20.85. Macau gambling revenue rose 12 percent in September, the city’s Gaming Inspection and Coordination Bureau said in a statement Oct. 4, missing the 15 percent to 20 percent growth predicted by Bank of America Merrill Lynch.

“We are getting favorable indicators about the U.S. economy, and stocks are reacting,” said Takashi Ito, a strategist equity market at Nomura Securities Co., Japan’s biggest brokerage. “Each nation has been easing policy to reach their own targets. For the U.S. it’s employment, and that’s why markets are bound to react to the jobs data.”

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net


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