Bloomberg News

Asia Stocks Set for Longest Winning Streak in Three Years

December 12, 2012

Asian Stocks Advance on U.S. Budget Talk, Fed Policy Optimism

A man walks past an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

Asian stocks rose, with the regional benchmark index heading for its longest streak of gains in three years, amid speculation the Federal Reserve will step up monetary easing. South Korean shares closed higher even after North Korea launched a rocket.

James Hardie Industries SE, a building-materials supplier that counts the U.S. as its biggest market, added 1.7 percent in Sydney. Mitsubishi Motors Corp. (7211) jumped 10 percent after the Nikkei newspaper reported the Japanese carmaker’s withdrawal from European production will boost its profit. Guoco Group Ltd. surged 31 percent in Hong Kong after the property developer received a HK$8.25 billion ($1 billion) buyout offer from its biggest shareholder.

The MSCI Asia Pacific Index (MXAP) advanced 0.5 percent to 127 as of 7:28 p.m. in Tokyo, heading for its 10th day of gain, the longest winning streak since July 2009. More than two shares rose for each that fell. The measure advanced 11 percent this year through yesterday as central banks took steps to support economic growth. The Federal Reserve concludes a two-day meeting today as policy makers consider whether to continue with quantitative easing.

“The market expects the Fed to announce additional monetary easing measures,” said Mitsushige Akino, Tokyo-based chief fund officer at Ichiyoshi Asset Management Co., which oversees about 30 billion yen ($364 million). “Investors are waiting to see what will happen. If it’s not as expected, it could be very bad for the market.”

Fed officials are considering whether to supplement $40 billion a month of mortgage-bond buying with purchases of Treasuries when their Operation Twist program expires at the end of the month. If expanded as expected, the new program will push the central bank’s balance sheet to almost $4 trillion.

Asian Titans

The MSCI Asia Pacific Index advanced in the past three weeks amid signs the world’s two biggest economies are improving. The Dow Jones Asian Titans Index, which tracks Asia’s 50 biggest companies, has risen in the 10 days through today, its longest streak of gains since May 1997. The MSCI Asian gauge traded at 14.2 times estimated earnings, compared with 13.8 times for the S&P 500 Index and 12.7 times for the Stoxx Europe 600.

South Korea’s Kospi Index (KOSPI) added 0.6 percent. North Korea launched a long-range rocket today in defiance of international sanctions, an indication the totalitarian regime is making progress in its ballistic-missile technology.

Asian defense contractors advanced. Singapore Technologies Engineering Ltd. (STE), which makes ammunition, and builds tanks and naval ships, gained 2.1 percent to S$3.85. Kawasaki Heavy Industries Ltd., which gets 20 percent of its sales from aerospace and defense, jumped 3.7 percent to 198 yen in Tokyo.

Machinery Orders

Japan’s Nikkei 225 Stock Average climbed 0.6 percent as the nation’s machinery orders rose for the first time in three months. Australia’s S&P/ASX 200 Index gained 0.2 percent. Hong Kong’s Hang Seng Index advanced 0.8 percent, while China’s Shanghai Composite Index rose 0.4 percent.

Futures on the Standard & Poor’s 500 Index were little changed today. The S&P 500 gained 0.7 percent yesterday as German investor confidence climbed and traders awaited progress on federal budget negotiations in Washington.

President Barack Obama is seeking a budget deal with Republican lawmakers to avert the so-called fiscal cliff, which would result in more than $600 billion of automatic tax increases and spending cuts next year. House Speaker John Boehner said yesterday he is still “hopeful” the parties can reach a budget agreement before the end of the year.

Exporters to the U.S. advanced. James Hardie rose 1.7 percent to A$9.36 in Sydney. Techtronic Industries Co. (669), the maker of Ryobi power tools that counts North America as its biggest market, jumped 9.3 percent to HK$15.08 in Hong Kong. Honda Motor Co. (7751), a Japanese carmaker that gets 44 percent of sales from North America, added 1.3 percent to 2,749 yen.

Europe Withdrawal

Mitsubishi Motors jumped 10 percent to 87 yen. The carmaker will add 15 billion yen ($181 million) to operating profit annually by ending its European production, the Nikkei newspaper reported, without saying where it got the information.

Osaka Securities Exchange Co. jumped 7.7 percent to 407,000 yen. The shares rose as much as 19 percent today after the Financial Services Agency yesterday approved the merger of the Osaka bourse and its Tokyo rival. The merged bourse, which will be called the Japan Exchange Group, will list on the first section of the Tokyo Stock Exchange on Jan. 4, the FSA’s statement said.

Celltrion Inc. (068270) climbed 7.3 percent to 28,750 won in Seoul after the pharmaceutical company announced a stock dividend plan.

GCL-Poly Energy Holdings Ltd., a Chinese solar-power company, jumped 11 percent to HK$1.49, the most on the MSCI Asia Pacific Index. The government will provide an additional 7 billion yuan ($1.1 billion) subsidy for solar-power projects this year, the Xinhua News Agency reported, citing a finance ministry statement.

Philippine Casino

Guoco Group surged 31 percent to HK$92.05. Guoline Overseas Ltd., led by Malaysian billionaire Quek Leng Chan, offered HK$8.3 billion, or HK$88 per share, for the rest of the investment company.

Robinsons Land Corp., controlled by Philippine billionaire John Gokongwei, rose 4.1 percent to a record 21.50 pesos in Manila. The property developer is close to reaching an agreement with Japanese businessman Kazuo Okada on a casino venture in Manila, the Philippine Daily Inquirer reported, citing a person it didn’t identify. Robinsons Land President Frederick Go and Vice Chairman Lance Gokongwei didn’t immediately respond to mobile phone messages seeking comment.

Unilever Indonesia (UNVR), a unit of the world’s second-biggest consumer goods company, sank 11 percent to 23,150 rupiah in Jakarta, the most since June 2005. The company said in a statement today that total royalties to Unilever NV would increase to 5 percent of its revenue beginning next year from 3.5 percent now.

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

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


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