Bloomberg News

Asia Stocks Rise for 2nd Day as Obama Pledges Budget Deal

November 19, 2012

Asian stocks gained for a second day, with the regional benchmark index heading for its biggest advance in a month, after President Barack Obama expressed confidence that he and Congress will reach a budget agreement.

Toyota Motor Corp., the world’s biggest carmaker, rose 1.4 percent in Tokyo. Japan Tobacco Inc. jumped 6.5 percent as the government plans to postpone the sale of its stake in the cigarette maker. Billabong (BBG) International Ltd. surged 10 percent in Sydney after the surf-wear maker said it’s considering a takeover.

The MSCI Asia Pacific Index rose 1 percent to 121.01 as of 7:38 p.m. in Tokyo, set for its biggest advance since Oct. 17. Almost two shares gained for each that fell on the gauge. The measure is extending its rally for a second day as Obama started talks with Republicans and Democrats on a budget. Failure to strike a deal will trigger more than $600 billion in automatic tax increases and spending cuts that economists say may throw the country into a recession.

“There were some early signs of some conciliatory language in the U.S. late Friday night that was encouraging,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank has about $1.5 trillion under management. “The market retracement this month is an opportunity to buy the dip as investors navigate through the political negotiation.”

Japan’s Nikkei 225 Stock Average increased 1.4 percent, its biggest advance in a four-day period since March 2011. The Bank of Japan holds a meeting today amid speculation the country’s opposition party that advocates more aggressive monetary policy easing will take power at elections in December.

U.S. Futures

Australia’s S&P/ASX 200 Index added 0.6 percent, while South Korea’s Kospi Index rose 0.9 percent. Hong Kong’s Hang Seng Index gained 0.5 percent. China’s Shanghai Composite Index added 0.1 percent, erasing losses of as much as 0.9 percent.

Futures on the Standard & Poor’s 500 Index advanced 0.4 percent today. The S&P 500 retreated for a second straight week last week and has lost almost 5 percent since the Nov. 6 election set up a budget showdown between Obama and the Republican-controlled House.

The U.S. equity benchmark reversed losses of as much as 0.7 percent Nov. 16, closing 0.5 percent higher, after U.S. House Speaker John Boehner said talks over the so-called fiscal cliff were “constructive.” Obama, who is visiting Asia this week, said he is confident a deal can be achieved.

Exporters to the U.S. advanced. Toyota climbed 1.4 percent to 3,370 yen in Tokyo. Li & Fung Ltd. (494), a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., rose 2.7 percent to HK$12.38 in Hong Kong. Samsung Electronics Co., Asia’s biggest exporter of consumer electronics, added 1.9 percent to 1.332 million won in Seoul.

Japan Tobacco

Japan Tobacco jumped 6.5 percent to 2,411 yen. The Japanese government will postpone the planned sale of part of its 50 percent stake in the company due to weak economic conditions, political uncertainty and a possible tax increase, according to a finance ministry official, who asked not to be named.

Billabong surged 10 percent to 81.5 Australian cents. Paul Naude, who has been the company’s president of the Americas since 1998, is examining a potential buyout, five weeks after TPG International LLC scrapped a bid. Naude will stand aside for six weeks to seek talks with financiers and gain support for a bid proposal, the company said in a regulatory statement today.

The MSCI Asia Pacific Index gained 9.9 percent from this year’s low on June 4 through the end of last week as central banks added stimulus to spur economic growth and data showed a slowdown in China may be ending. Shares on the Asian benchmark index traded at 13.2 times estimated earnings, compared with 13.1 times for the S&P 500 Index and 11.8 times for the Stoxx Europe 600.

Index Changes

Kunlun Energy Co., a Chinese gas supplier controlled by PetroChina Co., advanced 3.1 percent to HK$15.38 in Hong Kong. The Hang Seng Indexes Co. will add Kunlun to the Hang Seng Index effective Dec. 10, increasing the components of the Hong Kong equity benchmark index to 50 from 49 currently.

Great Wall Motor Co., China’s biggest maker of sport utility vehicles and pickup trucks, rose 4.8 percent to HK$24.05. The stock will be added to the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong, replacing BYD Co., the Chinese automaker partially owned by Warren Buffett’s Berkshire Hathaway Inc. BYD gained 2.5 percent.

Kangwon Land Inc. climbed 5.1 percent to 27,750 won in Seoul. The South Korean casino and hotel operator will get government approval this month to expand its gambling business, MoneyToday reported on Nov. 16, citing unidentified industry officials. Kim Hong Dae, a spokesman for Kangwon Land, declined to comment, while Lee Jun Hyub, an official at the ministry’s tourism promotion division, said nothing has been decided.

Ping An

Among stocks that declined, Ping An Insurance Group Co., slipped 1.9 percent to HK$58.45. HSBC Holdings Plc is in talks to sell its $9 billion stake in China’s second-largest insurer as the U.K. bank sheds assets to revive profit growth.

Shandong Weigao Group Medical Polymer Co. tumbled 17 percent to HK$8.19 in Hong Kong after the maker of syringes and blood bags reported third-quarter profit that missed analysts’ estimates.

Of the 565 companies on the MSCI Asia Pacific Index (MXAP) that reported quarterly results since Oct. 1, for which estimates are available, 55 percent fell short of expectations, according to data compiled by Bloomberg News.

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