Asian Stocks Rally From 3-Year Low; Chinese Bank Shares Surge

By Kyung Bok Cho and Ian C. Sayson
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Sept. 19 (Bloomberg) -- Asian stocks and U.S. futures surged as central banks pumped cash into money markets and worked on plans to shore up banks and insurers.

Macquarie Group Ltd., Australia's largest investment bank, soared 38 percent. Morgan Stanley jumped 11 percent in after- hours trading as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke pledged to work through the weekend on measures to ease the credit crisis. China's CSI 300 Index surged by a record 9.3 percent, led by Bank of China Ltd., after the government scrapped a stock-trading tax and said it will buy more shares in three of the largest banks.

``No one can say if we have finally seen the end,'' said Marvin Yap, who helps manage the equivalent of $6.7 billion at BPI Asset Management Inc in Manila. ``What's certain is investors got a temporary reprieve. We could have seen more selling losses if these steps weren't taken.''

The MSCI Asia Pacific Index added 4.6 percent to 113.15 as of 3:33 p.m. in Tokyo, with 70 of its 991 members climbing 10 percent or more. A gauge of financial companies advanced 8 percent, the most among the gauge's 10 industry groups.

The measure, which rebounded from its lowest close in three years, is still down 2.6 percent this week. Today's rally was spurred on as central banks poured $220 billion into the world financial system to encourage lending, while U.S. and U.K. regulators considered restricting investors from betting on declines. Paulson and Bernanke are considering a plan to move troubled assets from financial companies into a new institution.

Lower Valuations

Japan's Nikkei 225 Stock Average added 3.8 percent to 11,920.86. Hong Kong's Hang Seng Index rose 6.7 percent. All markets open for trading in the region advanced. U.S. Treasuries and Japanese bonds fell on speculation Paulson and Bernanke's plan will increase demand for stocks over bonds. The dollar rose 1.4 percent against the yen, the most since Aug. 22.

Standard & Poor's 500 Index futures gained 2.4 percent in after-hours trading. The S&P 500 climbed 4.3 percent yesterday, the most in six years, after Senator Charles Schumer proposed an agency to pump capital into financial companies.

Bank lending seized up this week following Lehman Brothers Holdings Inc.'s bankruptcy filing and the U.S. government's takeover of American International Group Inc. Since the start of 2007, global financial companies have reported more than $510 billion in credit losses and writedowns linked to the slump in the U.S. housing market and slowing economic growth.

The MSCI Asia Pacific Index's drop in the week left it valued at 11.9 times estimated profit yesterday, the lowest in at least 15 years. The S&P 500 Index is cheaper at 14.2 times, while the Dow Jones Stoxx Index is at 9.7 times.

Easing The Squeeze

Macquarie, whose shares have lost half their value this year, jumped a record 38 percent to A$35.90. Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank by market value, rose 13 percent to 659,000 yen. Kookmin Bank, South Korea's biggest, advanced 7.1 percent to 55,900 won.

The Bank of Japan yesterday agreed to offer up to $60 billion to local and overseas financial institutions to ease the credit squeeze. The U.S. Securities and Exchange Commission said it may require hedge funds to disclose short-sale positions, while the Financial Services Authority in the U.K. prohibited short selling financial shares for the rest of the year.

National Australia Bank, the nation's biggest by assets, gained 17 percent to A$23, the most since January 1975. Nomura Holdings Inc., Japan's largest brokerage, advanced 10 percent to 1,305 yen.

Bank of China, the nation's second-biggest bank, jumped 10 percent to 3.36 yuan. A 24 percent slump in the month through yesterday left it valued at a record low of 10.5 times profit. Industrial & Commercial Bank of China Ltd., the country's largest, surged 9.9 percent to 3.78 yuan. China Construction Bank Corp. added 10 percent to 4.19 yuan.

`Immediate Impact'

The companies' state-owned controlling shareholder will buy shares on the open market to shore up investor confidence, the official Xinhua News Agency reported.

``The stimulus package had an immediate impact on restoring investor confidence, which has been crushed by expectations of economic slowdown,'' said Hu Xiaodong, a Shanghai-based fund manager at Martin Currie Investment Management Ltd., which oversees $4 billion in Greater China. ``The government may come up with more loosening measures to boost the economy, which will also ease investors' concerns.''

Shipping companies rose after cargo rates increased by the most in a month. Hanjin Shipping Co., South Korea's biggest, added 11 percent to 29,000 won. Kawasaki Kisen Kaisha Ltd., Japan's third-biggest, jumped 11 percent to 755 yen.

The Baltic Dry Index, a measure of commodity-shipping rates, gained 2.1 percent yesterday in London, the most since Aug. 14.

Korea Exchange Bank, controlled by U.S. buyout firm Lone Star Funds, fell 10 percent to 11,350 won, the biggest plunge since May 10, 2004. HSBC Holdings Plc, Europe's largest bank, said it scrapped its planned $6 billion purchase of the Korean bank after the global credit crisis slashed asset values.

To contact the reporters for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.