Asian Stocks Rise as Borrowing Costs Drop; Mizuho, Westpac Gain

By Chua Kong Ho and Chan Tien Hin

Nov. 4 (Bloomberg) -- Asian stocks rose, led by Japanese and financial companies, as lending costs tumbled the most in almost a decade in Japan and Australia's central bank cut interest rates.

Mizuho Financial Group Inc. jumped more than 7 percent as Japan's three-month interbank rate fell and trading resumed after yesterday's holiday, when other Asian markets advanced. Westpac Banking Corp. added 3.9 percent following the Reserve Bank's three-quarter percentage point rate cut. Cnooc Ltd. fell 5.5 percent after crude prices slumped, while Nissan Motor Co. sank 11 percent after slashing its profit forecast by 53 percent.

The MSCI Asia Pacific Index gained 2.4 percent to 89.88 as of 3:51 p.m. in Tokyo. All 10 industry groups climbed, with financial stocks contributing the most to the advance. About two stocks rose for every one that declined.

``Markets turned around after a deeper-than-expected rate cut in Australia, emphasizing once again the determination of governments globally to bring down the cost of capital,'' said Howard Wang, who oversees $10 billion at JF Asset Management in Hong Kong.

Japan's Nikkei 225 Stock Average gained 6.3 percent to 9,114.60, rebounding from its worst monthly slump on record. Panasonic Corp. climbed 6.8 percent on speculation it will buy Sanyo Electric Co. Japan's markets were shut yesterday, when the MSCI Asia Pacific excluding Japan Index advanced 5.2 percent. Markets around the region were mixed, with the biggest declines in China, Singapore and Philippines.

Cnooc, Mizuho

Futures on the Standard & Poor's 500 Index added 0.2 percent. U.S. stocks declined yesterday, with the S&P 500 dropping 0.3 percent, on the worst contraction in manufacturing since 1982 and forecasts that the sagging economy will reduce profits.

Mizuho, Japan's second-largest bank by revenue, gained 7.1 percent to 248,400 yen. Mitsubishi UFJ Financial Group Inc., Japan's largest bank, climbed 4.9 percent to 627 yen. The Tokyo interbank offered rate, or Tibor, fell 9.8 basis points to 0.791 percent around noon, the most since December 1999, according to the Japanese Bankers Association.

Shinhan Financial Group Ltd., which controls South Korea's third-biggest bank, gained 11 percent to 36,800 won.

Westpac, Australia's second-biggest bank by market value, rose 3.9 percent to A$22.30. National Australia Bank Ltd. added 1.7 percent to A$25.52.

Australian Rate Cut

Australian central bank Governor Glenn Stevens lowered the overnight cash rate target to 5.25 percent from 6 percent in Sydney today, adding to last month's 1 percentage point reduction. Fifteen of 16 economists surveyed by Bloomberg News forecast a half-point cut and one expected a quarter-point drop.

The Markit iTraxx Australia index of credit-default swaps declined 10 basis points to trade at 235 as of 2:40 p.m. in Sydney, Citigroup Inc. data show.

``The stability of financial markets has been restored somewhat,'' said Hideyuki Ookoshi, who helps oversee about $365 million at Chiba-Gin Asset Management Co. in Tokyo. ``Investors are keeping a keen eye on government efforts to shore up banks' capital, which is the key to the recovery of global economies.''

Borrowing costs fell last week in Asia and Europe after central banks slashed rates and governments pledged as much as $3 trillion of emergency funds to reverse a collapse in trust among banks. Financing dried up after Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15, shattering lenders' confidence they would be repaid.

Panasonic, Tokyo Electric

Panasonic, the world's largest consumer-electronics maker, gained 6.8 percent to 1,614 yen on its plan to buy control of Sanyo Electric. Panasonic will make a formal acquisition proposal soon to Goldman Sachs Group Inc., Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC Co., a company official familiar with the negotiations said Nov. 1. The three banks hold preferred shares equal to 70 percent of Sanyo.

Cnooc Ltd., China's largest offshore oil producer, fell 5.5 percent to HK$6.25 in Hong Kong. Crude oil fell 5.8 percent to $63.91 a barrel yesterday in New York, the biggest drop since Oct. 22.

Nissan Motor Co., which cut its profit forecast by 52 percent, dropped 11 percent to 441 yen. The fixed dividend payments Nissan Chief Executive Officer Carlos Ghosn promised to shareholders for the next three years will be reviewed, the carmaker said on Oct. 31.

Tokyo Electric Power Co., Asia's biggest utility, gained 4.3 percent to 2,890 yen after forecasting a narrower loss. The company said on Oct. 31 it expects an annual net loss of 220 billion yen ($2.2 billion), compared with an earlier guidance for a 280 billion yen loss. Tokyo Gas Co., Japan's largest natural gas distributor, advanced 6 percent to 445 yen after predicting a full-year profit, reversing an earlier loss forecast.

Singtel, Hynix

NTT DoCoMo Inc., Japan's largest mobile-phone operator, climbed 2.7 percent to 149,200 yen, after reporting second- quarter profit rose 40 percent to 173.1 billion yen.

Dividend yields on companies in the Nikkei reached 2.52 percent on Oct. 31, higher than the 1.48 percent yields on Japanese government 10-year bonds. The stock yields exceeded 2 percent on Oct. 3 for the first time since at least July 1989.

Singapore Telecommunications Ltd., which gets more than half its profit from its overseas unit, fell 6.8 percent to S$2.34. The phone company said second-quarter earnings will be hurt by currency movements, without providing specific figures.

Hynix Semiconductor Inc., the world's second-largest computer-memory maker, lost 6.8 percent to 10,250 won in Seoul after Moody's Investors Service cut its debt rating one level to Ba3, citing the company's weaker credit profile and earnings. Goldman, Sachs & Co. lowered its price estimate by 29 percent.

To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net