Bloomberg News

Asian Stocks Rise Third Week Amid Recovery Signs in China, U.S.

December 07, 2012

Asian stocks rose for a third week, with the regional benchmark gauge capping the longest winning streak in three months, as China’s government pledged to boost urban development and gains in U.S. services and factory orders boosted exporters.

The Shanghai Composite Index (SHCOMP) rose 4.1 percent this week, the biggest such gain since October 2011. Anhui Conch Cement Co., China’s biggest cement maker, paced gains among construction- related shares as the country’s new leadership vowed to support urbanization. James Hardie Industries SE (JHX), which gets 67 percent of sales from the U.S., rose 3.9 percent in Sydney. Shimizu Corp. paced gains among construction companies in Tokyo on bets a deadly highway-tunnel collapse will lead to more public works spending.

The MSCI Asia Pacific Index (MXAP) gained 1.2 percent to 126.14 this week, capping a seven-day rally, the longest rising streak since September. Gains were limited as U.S. lawmakers continued to negotiate a budget compromise to avert the so-called fiscal cliff.

“The economic data looks OK and that’s been supporting the share market,” said Shane Oliver, Sydney-based head of strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “Markets will have to see a resolution of the U.S. fiscal cliff for the rally to continue.”

The MXAP measure advanced almost 16 percent from this year’s low on June 4 as central banks from Europe, the U.S., Japan and China took steps to support economic growth. The gauge traded at 14.2 times estimated earnings on average, compared with 13.6 times for the Standard & Poor’s 500 Index and 12.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japan Quake

Australia’s S&P/ASX 200 rose 1 percent as the central bank cut its benchmark interest rate to 3 percent. South Korea’s Kospi Index climbed 1.3 percent. New Zealand’s NZX 50 Index fell 0.2 percent in Wellington. Taiwan’s Taiex Index (TWSE) increased 0.8 percent. Singapore’s Straits Times Index rose 1.2 percent.

Japan’s Nikkei 225 Stock Average added 0.9 percent. Little damage was reported from a 7.3-magnitude earthquake that struck northeast Japan after markets closed yesterday.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 4.1 percent. Hong Kong’s Hang Seng Index gained 0.7 percent while a gauge of Chinese companies listed in the former British colony advanced 2.8 percent.

China ETF

The iShares FTSE A50 China Index exchange traded fund, the biggest such vehicle that allows people outside China to invest in the country’s domestic shares, surged 6.5 percent in Hong Kong.

China’s official manufacturing Purchasing Managers’ Index rose to 50.6 in November, the highest reading in seven months, data released by the National Bureau of Statistics and China Federation of Logistics and Purchasing on Dec. 1 showed. A reading above 50 indicates expansion. Another private survey also showed expansion.

China will keep its proactive fiscal policy and prudent monetary policy and promote economic restructuring and urbanization, Chinese Communist Party Secretary Xi Jinping was cited as saying by the official China Central Television on Dec. 6.

‘Positive Benefit’

“There’s a lot of talk about potential policy support for China’s economy,” said Tim Leung, a fund manager who helps oversee about $1.5 billion at IG Investment Ltd. “While urbanization is not new, people will probably be focusing on that trend. There’s a lot of positive benefit from urbanization, like infrastructure spending.”

Anhui Conch Cement jumped 9.1 percent to HK$28.15 and China National Building Material Company Ltd. surged 9.1 percent to HK$11.04 in Hong Kong. China Resources Land Ltd., a mainland developer, climbed 2.2 percent to HK$21.15. Evergrange Real Estate Group Ltd. 3.6 percent to HK$4.01.

Companies that do business in the U.S. advanced after U.S. data showed orders for equipment such as computers and electrical gear climbed in October by the most in eight months and service industries unexpectedly grew at a faster pace in November.

James Hardie rose 3.9 percent to A$9.44. Honda Motor Co. (7267), a carmaker whose 44 percent of revenue comes from North America, added 1.2 percent to 2,764 yen in Tokyo. Samsung Electronics Co. (005930), an electronics maker that gets 20 percent of its sales in America, advanced 5.3 percent to 1.48 million won in Seoul.

Fiscal Cliff

The S&P 500 rose 0.1 percent this week as U.S. policy makers continued to grapple with a budget compromise that would avert a series of tax increases and spending cuts, the so-called fiscal cliff.

Japanese construction companies advanced this week after a fatal tunnel collapse raised the outlook for infrastructure spending. Shimizu rose 6.1 percent to 263 yen and Obayashi Corp. advanced 4.4 percent to 406 in Tokyo.

Ping An Insurance (Group) Co. gained 2.3 percent to HK$60, its first weekly advance in five weeks. HSBC, Europe’s biggest bank by market value, is selling its 15.6 percent stake in the insurer at HK$59 a share to Thailand’s Charoen Pokphand Group Co., it said. HSBC added 0.6 percent to HK$79.25.

Separately, People’s Insurance Co. (Group) of China climbed 6.9 percent to HK$3.72 on its Dec. 7 trading debut. The insurer raised HK$24 billion ($3.1 billion) in Hong Kong’s biggest initial public offering since 2010.

SC Global Developments Ltd. surged 49 percent to S$1.80 in Singapore after Chief Executive Officer Simon Cheong, who already owns 55 percent of the company, offered to buy the rest of the property developer and take it private.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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