Asian Stocks Climb, Snapping Four-Day Decline; Hang Seng Jumps

By Chen Shiyin and Patrick Rial
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Oct. 28 (Bloomberg) -- Asian stocks climbed, snapping four days of declines, as investors speculated recent losses were overdone and the yen dropped.

Hong Kong's Hang Seng Index rallied 14 percent, rebounding from its biggest decline in a decade, as HSBC Holdings Plc surged. Toyota Motor Corp. climbed 7.8 percent in Tokyo, where the Nikkei Nikkei 225 Stock Average closed yesterday at a 26-year low. Hynix Semiconductor Inc. soared 15 percent in Seoul, after South Korea's National Pension Service said it's buying stocks.

The MSCI Asia Pacific Index added 3.7 percent to 77.99 as of 6:03 p.m. in Tokyo, erasing earlier losses of 2.8 percent. The measure slumped 19 percent in the previous four days, closing yesterday at the lowest since August 2003. Futures on the Standard & Poor's 500 Index gained 3.2 percent.

``We are beginning to see a lot of value emerging,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion. ``On a fundamental basis, stocks are starting to look appealing for investors with a long- term horizon.''

More than $12 trillion was erased from the market value of equities this month, accounting for about one-third of the total value wiped off stocks this year, as almost $680 billion of writedowns and losses by banks triggered a freeze in credit markets.

MSCI's Asian index has lost 51 percent this year on concern the widening financial crisis and slowing economic growth will hurt company profits. The measure now trades at less than 1 times book value, compared with the S&P 500's 1.6 times.

Queensland Gas Co. soared, paring declines in Australia, after BG Group Plc agreed to buy the rest of the company.

The Nikkei 225 gained 6.4 percent. Finance Minister Shoichi Nakagawa said restrictions on short-selling of shares will take effect today to bolster the stock market.

`Sun Will Shine'

The yen dropped for the first time in six days against the dollar and dropped the most in almost eight years versus the euro as the rebound in stocks bolstered investor confidence in higher- yielding assets.

``Eventually the sun will shine and some investors will be smiling again,'' said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, whose parent company manages about $3.1 billion. ``Panic also means opportunities.''

Hong Kong's 13 percent plunge yesterday pushed its October decline to 39 percent and cut the index's price relative to net assets to 1.05, the lowest since September 1998. The measure jumped the most since October 1997 today. Financial Secretary John Tsang said the government will take steps to support the market if needed, without saying if that includes buying equities.

HSBC, the world's No. 2 bank by market value, gained 20 percent to HK$90 in Hong Kong. The stock lost 25 percent in the previous two trading sessions.

Rating Raised

PetroChina Co., the nation's largest oil explorer, rallied 9.4 percent to HK$4.65, halting a four-day, 34 percent retreat. JPMorgan Chase & Co. today raised its rating on the shares to ``overweight'' from ``underweight,'' citing the recent sell-off.

Toyota, Japan's largest automaker, rose 7.8 percent to 3,170 yen, halting a four-day, 22 percent drop. JFE Holdings Inc., Japan's second-biggest steelmaker, rallied 16 percent to 2,265 yen. Both shares traded at less than 7 times trailing earnings.

The Nikkei 225 lost more than 20 percent in the past five trading days, closing yesterday at the lowest since October 1982. The slump prompted the government to bring forward restrictions on short selling of shares to today from Nov. 4.

Japan's currency dropped to 95.55 per dollar at 6:03 a.m. in London, from 92.78 late yesterday in New York. It reached 90.93 on Oct. 24, the highest since August 1995. The currency slid 3.3 percent, the most since January 2001, to 119.95 per euro.

`Possible Intervention'

The yen also declined on speculation Japan's central bank will sell its currency for the first time since March 2004.

``Equities are rebounding, giving some assurance to investors,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``There also are fears of possible intervention by Japan. All of this is causing selling of the yen.''

Hynix, the world's second-biggest memory chip-maker, soared 15 percent to 9,330 won, rebounding from a five-day, 47 percent slump. South Korea's National Pension Service is buying stocks as the deepening credit crisis made equities cheaper, said Hong Sung Gi, head the fund's investment strategy division.

In Australia, Queensland Gas jumped 80 percent to A$5.75. BG, the No. 3 U.K. oil and gas producer, will pay A$5.2 billion ($3.1 billion) to buy the rest of the Brisbane-based company to gain full control over their planned liquefied natural gas venture.

Mitsubishi UFJ

Limiting gains, Mitsubishi UFJ Financial Group Inc., Japan's largest listed bank, lost 5.5 percent to 551 yen after saying it sell as much as 600 billion yen of common shares and a further 390 billion yen of preferred shares.

That raised concern new equity sales will dilute the value of existing stock, already ravaged by slowing demand for loans in the world's second-biggest economy. Sumitomo Mitsui Financial Group Inc., the second-largest, dropped 13 percent to 335,000 yen.

Kowloon Development Co., a Hong Kong and Macau developer, plunged 42 percent to HK$1.55 after reporting HK$3.8 billion in losses from investing in equities and derivatives.

Asian money-market rates advanced for a second day as concern the credit crisis has dragged the global economy into a recession overshadowed efforts by policy makers to revive lending. Hong Kong's three-month interbank lending rate climbed to the highest since Oct. 17, while Australian financing costs rose for the fifth time in six days.

Elpida Memory Inc., Japan's biggest maker of computer-memory chips, tumbled 19 percent to 437 yen. It has plunged 89 percent this year, the biggest loss on the MSCI Asia-Pacific Information Technology Index, after it reported this month a first-half loss and analysts said the company may fail to pay back loans.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.