By Kyung Bok Cho and Ian C. Sayson
Nov. 21 (Bloomberg) -- Asian stocks and U.S. futures rose on speculation governments will step up efforts to revive economies and after the Wall Street Journal reported Citigroup Inc. may be sold.
HSBC Holdings Plc gained 4 percent after Hong Kong’s monetary authority said China branches of the city’s lenders can receive liquidity from the mainland’s central bank. Mizuho Financial Group Inc., Japan’s second-largest bank, climbed 14 percent on optimism a merger between Citigroup and a rival will reduce risk in the financial system. Fortescue Metals Group Ltd. jumped 40 percent on a profit report.
“The best stimulus out there is for governments to spend,” said Jonathan Ravelas, a strategist at Banco de Oro Unibank Inc. in Manila, which manages more than $6 billion. A Citigroup merger would “avert a collapse, which the financial system and investors wouldn’t want to hear at this stage.”
The MSCI Asia Pacific Index added 2.9 percent to 77.34 at 4:43 p.m. in Tokyo, erasing a 2.3 percent retreat. Finance companies were the biggest contributor to the gain. Today’s advance pared the weekly retreat to 6.9 percent.
Futures on the U.S. Standard & Poor’s 500 Index added 3.2 percent. U.S. stocks tumbled yesterday, with the S&P 500 dropping 6.7 percent to its lowest in 11 years, as economic data pointed to a worsening recession and lawmakers postponed a vote on a plan to salvage the auto industry.
Stimulus Measures
MSCI’s Asian index has plunged 51 percent in 2008 as global financial companies’ losses and writedowns from the collapse of the U.S. subprime-mortgage market neared $1 trillion, eventually toppling Lehman Brothers Holdings Inc. Rallies have fizzled -- most recently a 25 percent gain posted in the seven trading days following Oct. 27 -- as the economies of the U.S., Japan and the euro-zone entered recession.
Shares on the MSCI gauge are now valued at 9.5 times trailing earnings after falling to as low as 8.2 times last month. That compares with 19.5 times on Nov. 11, 2007, when the measure hit a peak of 172.32. Prior to the current market turmoil, it never dropped below 10, according to Bloomberg data dating back to 1995.
Japan’s Nikkei 225 Stock Average added 2.7 percent to 7,910.79, with most markets in the region reversing earlier declines. South Korea’s Kospi index advanced for the first time in nine days, rising 5.8 percent, while Hong Kong’s Hang Seng Index gained 3.1 percent.
HSBC added 3.1 percent to HK$77.95. China Construction Bank Corp., the nation’s second-largest, climbed 7.2 percent to HK$3.85 in Hong Kong.
‘Very Positive News’
China branches of Hong Kong banks can pledge collateral to receive cash from the mainland’s central bank if needed, said Joseph Yam, chief executive of the city’s monetary authority.
“That’s very positive news, especially for smaller banks, to have a guarantee of liquidity,” said Castor Pang, a strategist at Sun Hung Kai Securities Ltd. in Hong Kong.
China’s central bank and finance ministry also said they will deposit 50 billion yuan ($7.3 billion) of the treasury’s cash with commercial lenders to help make more funds available for lending.
In Singapore, the finance ministry said it will extend more loans to local companies and help more firms to get financing for overseas projects. City Developments Ltd., Singapore’s second-largest developer by assets, added 3.6 percent to S$5.51. Keppel Land Ltd., the third largest, rose 2.8 percent to S$1.48.
Mizuho Financial Group Inc., which invested in Merrill Lynch & Co. in January, rallied 14 percent to 226,900 yen. Commonwealth Bank of Australia, the nation’s biggest home-loan provider, climbed 5.6 percent to A$30.95. Woori Finance Holdings Co., owner of South Korea’s second-biggest bank, rose 6.9 percent to 5,400 won.
Citigroup Merger?
Citigroup’s board meets today to discuss the bank’s options, a person familiar with the matter said. The company, whose shares fell a record 26 percent yesterday, is considering selling off assets or the whole company, the Journal said. The bank has reported $20 billion in losses during the last four quarters.
Executives aren’t actively exploring a sale or breakup of the U.S. bank in response to pressure from shareholders and analysts to boost its share price, the New York Times said. Richard Tesvich, a Hong Kong-based Citigroup spokesman, declined to comment on the newspaper reports.
Fortescue, Australia’s third-largest iron ore exporter, jumped 40 percent to A$1.80. The company said yesterday it would have a “trading profit” of A$360 million ($219 million), prompting Goldman Sachs JBWere Pty to raise its profit forecast by 22 percent.
Won Declines
South Korean shipbuilders gained as investors bet a weaker currency will boost the value of dollar-denominated orders, said Cho In Karp, an analyst at Good Morning Shinhan Securities Co. The South Korean currency fell as low as 1,524.50 against the dollar today, its weakest since March 1998.
Hyundai Heavy Industries Co. rose by the daily limit of 15 percent to 143,500 won, Samsung Heavy Industries Co. jumped 15 percent to 19,550 won. Daewoo Shipbuilding & Marine Engineering Co. added 15 percent to 14,750 won. The companies are the world’s largest shipbuilders.
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.
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