By [bn:PRSN=1] Chua Kong Ho []
Dec. 13 (Bloomberg) -- Asian stocks rose this week, led by energy and raw-materials producers, after U.S. President-elect Barack Obama pledged the biggest public works program in about 50 years and governments stepped up measures to arrest the recession.
BHP Billiton Ltd., the world’s largest mining company, gained 10 percent and Cnooc Ltd. rose 24 percent as metals and oil climbed. Komatsu Ltd., the world’s No. 2 maker of construction machinery, gained 22 percent after Obama planned the largest spending package since President Dwight D. Eisenhower created the interstate highway system. Honda Motor Co. tumbled 12 percent yesterday, paring the week’s gain to 16 percent, after the Senate voted down a bill to provide $14 billion in emergency funds for General Motor Corp. and Chrysler LLC.
“Governments, not only the U.S., must spend to replace the growth that will be lost from weak consumer spending,” said Jonathan Ravelas, a strategist at Banco de Oro Unibank Inc. in Manila, which has more than $6 billion in trust assets under management. “Investors have been waiting for this kind of stimulus to cushion the effects of a global slowdown.”
The MSCI Asia Pacific Index advanced 6.1 percent to 84.38 this week. The measure rose every day this week except yesterday, when markets sank after the U.S. Senate thwarted a rescue plan for U.S. automakers. Energy and raw-materials stocks led gains among the 10 industry groups this week.
Market Tumble
MSCI’s Asian index has plunged 46 percent in 2008 as global financial companies’ losses and writedowns from the collapse of the U.S. subprime-mortgage market neared $1 trillion.
Shares on the MSCI gauge are now valued at 10.1 times trailing earnings after falling to as low as 8.2 times last month. That’s half the 19.5 times on Nov. 11 last year, when the measure hit a peak of 172.32. Prior to the current market turmoil, the price-earnings ratio never dropped below 10, according to Bloomberg data.
Japan’s Nikkei 225 Stock Average gained 4 percent to 8,235.87. Japan Prime Realty Investment Corp. gained 37 percent after the Nikkei newspaper said the government will extend credit lines of as much as 2 billion yen ($22 million) to small and midsize developers as banks grow reluctant to lend.
China’s CSI 300 Index fell 2.6 percent, as the nation’s exports fell for the first time in seven years in November, home sales fell and retail sales grew at the slowest pace in nine months. Most other markets in Asia advanced this week.
Government Measures
Governments worldwide have introduced measures this year to buttress their economies from the worst financial crisis since the Great Depression. Obama said on Dec. 6 he will boost investment in roads, bridges and public buildings to create and preserve 2.5 million jobs.
India cut its repurchase rate to 6.5 percent from 7.5 percent on Dec. 6 and the government said it will spend an extra 200 billion rupees ($4 billion) in the year ending March 31. South Korea slashed its benchmark interest rate to a record low of 3 percent to stave off its first recession since 1998.
Komatsu, which gets half its sales overseas, jumped 22 percent to 1,106 yen.
Japan’s consumers were the most pessimistic in at least 26 years, according to the Cabinet Office yesterday. Sony Corp. and Toyota Motor Corp. were among the companies that announced production and job cuts this week.
Commodity Producers
BHP gained 10 percent to A$28.82. Nippon Mining Holdings Inc., which last week agreed to the biggest oil company merger in Japan since 1999, gained 20 percent to 346 yen. Cnooc, China’s largest offshore oil explorer, jumped 24 percent to HK$7.21.
A measure of six metals traded on the London Metal Exchange gained 4.1 percent this week, while oil rose 14 percent to $46.54 a barrel.
Honda Motor Corp., Japan’s second-largest automaker, surged 33 percent in the four days this week before tumbling 12 percent yesterday, after the Senate rejected a bailout plan for U.S. automakers that was passed by the House.
“Investors have been betrayed again by U.S. politicians,” said Yasuhiro Miyata, who helps manage about $109 billion at DIAM Co. in Tokyo. “Even with the knowledge that we are in the midst of a crisis, they were unable to come to an agreement and investors have decided to abandon ship. This could have a substantial effect on unemployment.”
BlueScope Steel Ltd., Australia’s largest steelmaker, tumbled 21 percent to A$2.85, after announcing plans to sell A$550 million ($364 million) in stock at a 23 percent discount.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net
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