Asian Stocks Climb on Central Banks, Mergers; Westpac Rises

By Chua Kong Ho and Saeromi Shin

Dec. 3 (Bloomberg) -- Asian stocks rose for the first time in three days as central banks stepped up efforts to ease the credit crisis and on signs of a revival in mergers.

Westpac Banking Corp. gained 2.5 percent in Sydney after the U.S. Federal Reserve extended an emergency loan program and the Bank of Japan eased lending terms for banks. Qantas Airways Ltd. climbed 4.4 percent after confirming it was in talks to merge with British Airways Plc. GST Holdings Ltd., a Chinese fire-alarm maker, surged 35 percent in Hong Kong after a takeover bid. China Mobile Ltd. rose 2.5 percent on speculation the government may award third-generation licenses.

“Governments across the globe are putting all possible cards on the table to shore up confidence,” said Hyun Dong Sik, a fund manager at Korea Investment Trust Management Co. in Seoul, which oversees the equivalent of $15 billion in assets. “It’s quite natural for big players to seize opportunities in a bad economy to swallow weaker rivals.”

The MSCI Asia Pacific Index gained 1.2 percent to 79.93 as of 5:44 p.m. in Tokyo. About two stocks climbed for each that declined. The measure dropped 4.5 percent yesterday, the most since Nov. 20. The gauge has lost 49 percent this year, and trades at an average of 1.06 times book value, compared with as high as 2.6 times last year.

Japan’s Nikkei 225 Stock Average advanced 1.8 percent to 8,004.10 as the Bank of Japan said it will accept lower- grade corporate debt as collateral for loans. Seven & I Holdings Co., the country’s largest retailer, surged after Macquarie Group Ltd. upgraded the stock.

Support Measures

Thailand’s SET Index advanced 2.9 percent after the central bank cut its benchmark interest rate by 1 percentage point to 2.75 percent and protesters ended their eight-day blockade of the country’s main international airport following the removal of Prime Minister Somchai Wongsawat. Airports of Thailand Pcl, which operates the besieged airport, gained the most in a week.

Air China Ltd. and Tokyo Electric Power Co. advanced amid optimism costs will drop as oil traded below $50 a barrel for a third day.

Futures on the Standard & Poor’s 500 Index lost 1.3 percent today. The gauge rallied 4 percent yesterday as the Fed extended terms of emergency loan programs to ease the credit crisis.

The Bank of Japan yesterday pledged to accept lower- grade corporate bonds as collateral for loans to help businesses get access to funds. Vietnam’s central bank also lowered interest rates for the fourth time in six weeks.

Financial Turmoil

The Reserve Bank of Australia lowered borrowing costs to a six-year low of 4.25 percent yesterday. A government report today showed the economy grew 0.1 percent in the third quarter from the previous three months, the smallest increase in eight years.

Stocks have fallen this year as the collapse of the U.S. mortgage market sparked financial turmoil that pushed the world’s biggest economies into recession. The U.S. first entered a recession in December 2007, the panel of economists that dates American business cycles said Dec. 1. The S&P 500 has declined 42 percent this year and the MSCI World Index by 47 percent.

Westpac, Australia’s biggest bank by market value, rose 2.5 percent to A$16.50. The lender cut its home-loan rates following yesterday’s rate reduction by the Reserve Bank of Australia.

Financial stocks also gained after the cost to protect Asian bonds from default declined. The Markit iTraxx Asia credit-default swap of 50 investment-grade borrowers outside Japan fell 20 basis points to 405. The region’s benchmark for high-risk, high-yield borrowers dropped 50 basis points to 1,150, according to Barclays Plc.

‘Good Value’

Mizuho Financial Group Inc., which has the most writedowns and credit losses among Asian banks, added 1.8 percent to 232,500 yen. Woori Investment & Securities Co. climbed 5.8 percent to 11,850 won in Seoul.

An index of financial stocks on MSCI’s Asian index trades at 0.97 times book value, about half the 2.02 times at the start of the year.

“We’re starting to see good value appear in some of Asia’s banks,” said Robert Rountree, Singapore-based head of investment marketing at Prudential Asset Management, which oversees about $40 billion in assets. His firm favors consumer and infrastructure stocks that will benefit from government spending programs, he said.

Qantas gained 4.4 percent to A$2.35. Chief Executive Alan Joyce wants to combine with British Airways to cut costs amid mounting losses for the airline industry. The two airlines currently have an alliance on flights between Australia and Europe. British Airways jumped 12 percent yesterday in London, the most since Jan. 4, 2002.

Broker Upgrade

GST surged 35 percent to HK$2.56, after United Technologies Corp. offered to buy the remaining 71 percent of the company it doesn’t already own for HK$1.9 billion ($245 million). The stock resumed trading today after being suspended since Nov. 10.

Seven & I gained 12 percent to 2,810 yen, the most since Nov. 4. Macquarie Group raised its stock recommendation to “outperform” from “neutral,” saying the retailer is benefiting from increased food sales as a worsening economy prompted consumers to opt for boxed lunches over dining out.

ABC-Mart Inc., a Tokyo-based shoe retailer, climbed 6.3 percent to 3,560 yen. The company yesterday said same- store sales rose 6.6 percent in November from a year ago.

Fuel Costs

Air China jumped 2.6 percent to HK$1.95 in Hong Kong. Fuel accounts for more than 40 percent of the carrier’s operating costs. Korean Air Lines Co., which posted its biggest quarterly loss in 10 years on higher fuel and a weak currency, gained 4.2 percent to 37,650 won.

Tokyo Electric gained 4 percent to 2,975 yen. A $1 change in a barrel of crude alters Tokyo Electric’s annual fuel costs by 18 billion yen ($193 million). Kansai Electric Power Co., Japan’s second-biggest utility, added 2.9 percent to 2,650 yen.

Oil futures in New York fell 4.7 percent yesterday to $46.96 a barrel, the lowest since May 20, 2005. Prices were at $47.29 in after-hours trading.

In Sydney, Rio Tinto Group tumbled 5.6 percent to A$36.80. The company said it’s reassessing expenditure and that the review may affect some exploration projects.

Toyota Motor Corp., Japan’s largest automaker, fell 0.9 percent to 2,800 yen, after November U.S. sales plunged 34 percent, the most since at least 1980. Honda Motor Co., the No. 2 carmaker, slumped 4.7 percent to 1,797 yen after U.S. sales last month dropped 32 percent.

China Mobile climbed 2.5 percent to HK$72.05, after state radio said the country will invest a total of 800 billion yuan ($116 billion) to provide 3G mobile services, and issue three licenses by the end of the year.

Airports of Thailand, which operates the Suvarnabhumi airport besieged by anti-government protesters, surged 4.8 percent to 17.40 baht, after demonstrators ended their eight-day blockade, allowing some passenger flights to leave as early as today.

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net.