Asian Stocks Gain, Led by Woodside, China Cosco on Earnings

By Chen Shiyin
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Aug. 27 (Bloomberg) -- Asian stocks gained, led by commodities producers and shipping companies, after Woodside Petroleum Ltd.'s earnings beat estimates and China Cosco Holdings Co. and Jiangxi Copper Co. said profit climbed.

Woodside, Australia's No. 2 oil and gas producer, jumped 3.9 percent as a new project and higher prices boosted profit. China Cosco, Asia's largest shipping company by market value, climbed 2.3 percent in Hong Kong after surging Chinese demand for raw materials helped net income more than double. Jiangxi Copper Co., China's biggest smelter of the metal, rose 2.8 percent.

``We're positive on commodities companies in the longer term as emerging-market usage of raw materials continue to grow,'' said Michael Foo, Singapore-based head of Asian portfolio management at Clariden Leu AG, which manages the equivalent of $126 billion in assets globally. ``Still, we remain cautious as a slowing economy is going to have a negative impact on earnings in the next few months.''

The MSCI Asia-Pacific Index gained 0.5 percent to 123.01 as of 2:15 p.m. in Tokyo, rebounding from a loss of as much as 0.2 percent. The regional measure has dropped 22 percent this year as the world's largest financial companies posted writedowns and credit losses of more than $500 billion, and inflation soared.

Japan's Nikkei 225 Stock Average slipped 0.2 percent to 12,752.88, paced by Mitsubishi Estate Co., after rival developer Sohken Homes Co. filed for bankruptcy. About half the region's stock indexes gained.

Ratings Downgrade

Macquarie Group Ltd. dropped to the lowest in almost four years as UBS AG downgraded Australia's biggest securities firm, saying the operating environment remains ``difficult.'' Hyundai Heavy Industries Co., the world's No. 1 shipbuilder, slumped after saying it plans to bid for a stake in Daewoo Shipbuilding & Marine Engineering Co.

U.S. stocks advanced yesterday, rebounding from the biggest drop in a month. Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, jumped after Citigroup Inc. analysts said the companies have enough capital to last the year. Futures for the Standard & Poor's 500 Index rose 0.1 percent today.

Woodside gained A$2.18 to A$58.68, set for its highest close since July 16. The company posted first-half profit of A$1.02 billion ($874 million) on record prices, topping the median forecast of A$939.3 million in a Bloomberg survey of analysts.

The shares also gained after crude oil for October delivery rose 1 percent to $116.27 a barrel in New York yesterday on forecasts showing that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production. Futures were at $116.91 today.

Oil Producers

Inpex Holdings Inc., Japan's largest oil explorer, added 1.2 percent to 1.141 million yen. PetroChina Co., China's biggest explorer, climbed 2.2 percent to HK$10.18 in Hong Kong.

Cnooc Ltd., China's No. 1 offshore oil company, rose 3.2 percent to HK$11.56 in Hong Kong. The company may say today first-half net income rose 52 percent to 22.1 billion yuan ($3.2 billion), according to the median estimate of five analysts surveyed by Bloomberg.

China Cosco climbed 34 cents to HK$14.92 in Hong Kong. Net income rose to 15.1 billion yuan ($2.2 billion) in the first half from 7.2 billion yuan a year earlier, the shipping line said.

Jiangxi Copper rose 2.8 percent to HK$11.86, poised for its highest close since Aug. 7. First-half profit rose 32 percent to 2.77 billion yuan ($404 million) because of a surge in byproduct prices, the company said.

Sime Darby Bhd., Malaysia's No. 1 palm-oil producer, gained 2.3 percent to 6.60 ringgit after saying fourth-quarter profit climbed 60 percent amid a jump in the price of the commodity.

Property Revaluations

Macquarie plunged 8.9 percent to A$41.95, on course for its lowest close since November 2004, after UBS cut its rating to ``neutral'' from ``buy,'' saying that slower stock and commodities trading and fewer investment bank deals will hurt earnings. The company also has ``less capital flexibility'' amid the global credit crunch, UBS said.

Also in Sydney, GPT Group dropped 2.7 percent to A$1.655 after reporting a first-half loss on writedowns to property and goodwill. The Australian real estate investment trust may sell as much as A$4.4 billion ($3.8 billion) of assets, GPT said today.

``People are expecting another reasonably large round of write-offs to come out of the investment banks,'' said Angus Gluskie, who helps oversee $500 million at White Funds Management in Sydney. ``It's been a weak time for the property market. We're expecting to see continued downward revaluations on property assets over upcoming periods.''

Mitsubishi Estate, Japan's second-biggest property developer, dropped 1.9 percent to 2,380 yen. Sumitomo Realty & Development Co., the third-largest, fell 1.9 percent to 2,380 yen.

Sohken Bankruptcy

The deteriorating Japanese property market and difficulty refinancing debt have been exacerbated by failures of other developers, Sohken said yesterday after markets shut. The company filed for court protection from creditors with liabilities of 33.9 billion yen ($309 million).

Bankruptcies among Japanese property companies more than doubled to 60 in July from a year earlier, according to Tokyo Shoko Research Ltd.

In South Korea, Hyundai Heavy dropped 3.1 percent to 236,500 won after the world's largest shipbuilder said it plans to bid for a controlling stake in Daewoo Shipbuilding & Marine Engineering Co. It's competing with Posco, GS Group and Hanwha Group to acquire a 50.4 percent holding being sold by state-run Korea Development Bank and Korea Asset Management Corp.

``We question Hyundai Heavy's rationale in buying another shipbuilder at this point in the cycle amid its own capacity expansion,'' Sanjeev Rana, an analyst at Merrill Lynch & Co., wrote in a report today. Hyundai Heavy's bid ``is likely to intensify the bidding war,'' said Rana, who rates the shipbuilder's stock ``underperform.''

Daewoo Shipbuilding, the world's third-largest maker of ships, rose 2 percent to 35,400 won.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net