By Chua Kong Ho and Ian Sayson
Dec. 11 (Bloomberg) -- Asian stocks rose, driving the region’s benchmark index to a fifth day of gains, as the U.S. moved closer to a $14 billion rescue of American car companies and South Korea cut interest rates to a record low.
Honda Motor Co., which earns about 70 percent of its operating profit in North America, added 7.9 percent after the U.S. House voted to approve the emergency loans. KB Financial Group Inc. surged 7.8 percent in Seoul. Gains were limited by declines among steelmakers. Baoshan Iron & Steel Co. fell 3.7 percent after China’s exports dropped for the first time in seven years, while BlueScope Steel Ltd. plunged 26 percent in Sydney after selling stock at a discount.
The MSCI Asia Pacific Index advanced 1.3 percent to 87.49 as of 5:12 p.m. in Tokyo, extending a four-day, 8.7 percent gain. The index has rallied 16 percent since reaching a five-year low on Nov. 20 as governments from Australia to South Korea took steps to protect their economies from the financial crisis.
“Sentiment is very fragile now and if the U.S. fails to pass the bailout, it will have a damaging impact on investors who are slowly gaining back some confidence,” said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $85 billion. “What’s positive are significant rate cuts around the world and the stimulus plans being put in place.”
MSCI’s Asian index is still down 45 percent this year, set for its worst annual drop in its 20-year history, as economies in Asia and Europe joined the U.S. in recession. Market declines contributed to the global hedge-fund industry losing $18 billion in November, while investor redemptions accounted for $46 billion of losses, Singapore-based Eurekahedge Pte said today.
Australian Unemployment
Japan’s Nikkei 225 Stock Average gained 0.7 percent to 8,720.55, paced by Honda. Australia’s S&P/ASX 200 Index fell 1.2 percent, led by Woolworths Ltd., after the jobless rate rose to the highest level in a year.
Futures on the Standard & Poor’s 500 Index lost 0.8 percent today. The S&P 500 yesterday climbed 1.2 percent, as higher energy and metal prices lifted commodity producers.
The House’s approval for a bailout could be a lifeline to General Motors Corp. and Chrysler LLC, which said they would run out of cash within weeks, and may help avert the loss of millions of jobs. The vote sends the measure to the Senate, where opposition is growing.
Honda gained 7.9 percent to 2,195 yen, while Mazda Motor Corp. climbed 5.1 percent to 165 yen. Preventing a collapse would also help protect suppliers from Johnson Controls Inc. to Lear Corp. that serve Asian carmakers.
Crude oil gained for a second day on speculation the rescue will limit declining demand for fuel. Crude for January delivery rose as much as 72 cents, or 1.7 percent, to $44.24 a barrel, in New York.
Inpex, PetroChina
Japan Petroleum Exploration Co., the nation’s second-largest oil producer, jumped 15 percent to 3,920 yen. Inpex Corp. gained 7 percent to 641,000 yen. PetroChina Co., China’s largest oil producer, increased 2.1 percent to HK$7.26.
In Seoul, KB Financial, which controls Kookmin Bank, rose 3.4 percent to 36,700 won. GS Engineering & Construction Co., South Korea’s third-largest builder, added 6 percent to 61,500.
The central bank reduced the seven-day repurchase rate by 1 percentage point to 3 percent in Seoul today, the lowest since the bank began to set a policy rate in 1999. The cut was wider than expected by any of the 16 economists surveyed by Bloomberg.
The cost of protecting Asia Pacific bonds from default declined. The Markit iTraxx Australia index of credit-default swaps fell 10 basis points to 360, according to Citigroup Inc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan was 5 basis points lower at 375, Barclays Capital prices show.
Steelmakers Drop
Baoshan Iron & Steel Co., China’s largest steelmaker, slid 3.7 percent to 5.41 yuan, pacing declines among the nation’s stocks. The country’s exports fell 2.2 percent in November, imports plunged and inflation cooled to the weakest pace in almost two years.
“Some economic data, particularly the export numbers, are worse than expected and have put pressure on the market,” said Xu Lirong, a fund manager at Franklin Templeton Sealand Fund Management in Shanghai, which manages about $2.56 billion.
Bluescope Steel, Australia’s largest steelmaker, fell 26 percent to A$2.98, the most in six years, after announcing plans to sell A$550 million ($364 million) in stock at a 23 percent discount. OneSteel Ltd., the second biggest, sank 8.2 percent to A$2.02, the lowest level since February 2004. The company said yesterday it doesn’t expect extraordinary profit in the first half.
Rio Tinto Group rose 7 percent to A$40, after saying it will eliminate 14,000 jobs, reduce debt and slash spending.
Woolworths Slumps
Australia’s unemployment rate increased to 4.4 percent from 4.3 percent in the previous month, the statistics bureau said today, increasing pressure on the central bank to add to its most aggressive round of interest-rate cuts since 1991.
Woolworths, Australia’s biggest retailer, slid 3.3 percent to A$26.19. Lion Nathan Ltd., the nation’s second-largest brewer, fell 4.7 percent to $A8.41.
China Southern Airlines Co. and China Eastern Airlines Co. soared more than 40 percent in Hong Kong after agreeing to sell 3 billion yuan ($437 million) of new shares to their parents to reduce debts. China Southern, the nation’s largest carrier, jumped 43 percent to HK$1.33. China Eastern surged 41 percent to HK$1.06.
Japan Tobacco Inc., the maker of Camel and Mild Seven cigarettes, gained 3.3 percent to 318,000 yen. The Asahi newspaper reported the government may abandon a plan to raise tobacco taxes.
To contact the reporter for this story: Chua Kong Ho at kchua6@bloomberg.net
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