Asian Stocks Rise to Six-Week High; Developers, Banks Climb

By Patrick Rial and Ian Sayson

Dec. 18 (Bloomberg) -- Asian stocks rose to a six-week high, led by developers and financial companies, on speculation the region’s central banks will reduce interest rates to revive economic growth.

Sumitomo Mitsui Financial Group Inc. and Mitsui Fudosan Co., Japan’s biggest developer, gained more than 6 percent in Tokyo as traders increased bets the Bank of Japan will lower borrowing costs tomorrow. A drop in oil below $40 a barrel spurred a 4.4 percent gain in Qantas Airways Ltd. Honda Motor Co. sank 3.5 percent, helping trim the market’s losses, after cutting its earnings forecast by 62 percent amid slumping global sales.

“Investors are looking forward to the cut in interest rates,” said Kenji Tomida, chief fund manager at T&D Asset Management Co. in Tokyo, which has about $16 billion in assets. “This is providing the market some relief and stability.”

The MSCI Asia Pacific Index gained 0.6 percent to 90.81 as of 11:38 a.m. in Tokyo. The gauge has rallied 21 percent since reaching a five-year low on Nov. 20 as governments from China to India took steps to bolster their economies from the worst financial crisis since the Great Depression.

The Nikkei 225 Stock Average gained 0.8 percent to 8,679.

Sumitomo Mitsui advanced 6.2 percent to 376,000 yen. Mitsui Fudosan rose 6.6 percent to 1,430 yen.

Investors see a 54 percent chance that the BOJ’s policy board will reduce the overnight call rate from 0.3 percent at this week’s meeting, according to calculations made by JPMorgan Chase & Co. based on interest-rate swaps trading, up from 20 percent on Dec. 16. The meeting ends tomorrow.

Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, rose 2.1 percent to 530 yen. The lender is likely to see increased loan volumes, Nana Otsuki, an analyst at UBS said. Otsuki upgraded the stock to “buy” from “neutral.”

Hana Gains

Hana Financial Group Inc., operator of South Korea’s fourth- largest bank, surged 5.9 percent to 23,200 won, bringing this week’s advance to 22 percent. Deutsche Bank AG boosted its price estimate on the shares, arguing the stock was undervalued after dropping as much as 75 percent this year.

Qantas rose 4.4 percent to A$2.36, as the declining oil price slashes the cost of jet-fuel for airlines.

Crude oil futures tumbled 8.1 percent to $40.06 a barrel in New York yesterday, the lowest settlement since July 2004, after touching $39.88. Prices have plunged 73 percent from a record on July 11.

Honda, Japan’s second-largest automaker, slid 3.5 percent to 1,825 yen. The company slashed its net income forecast for the year ending in March by 62 percent and chopped its third-quarter dividend in half, as the stronger yen crimped profits.

Koichi Sugimoto, an analyst at Merrill Lynch & Co. in Tokyo, cut his recommendation to “underperform” from “neutral.”

Chrysler Production

Aisin Seiki Co., the world’s biggest maker of automatic transmissions, tumbled 7.2 percent to 1,133 yen. JTEKT Corp., which makes power steering, lost 3.1 percent to 618 yen.

Chrysler LLC said yesterday it will shut all 30 of its plants for at least a month starting Dec. 19 as unsold cars and trucks pile up at showrooms.

Ford Motor Co. said it will idle most of its North American assembly plants for the first week of January, while General Motors Corp. said a new factory making engines for the Chevrolet Volt electric car is being delayed to conserve cash.

Commonwealth Bank of Australia, the nation’s biggest mortgage lender, slumped by a record 9.5 percent to A$26.39 as the nation’s biggest mortgage lender sold stock at a steeper discount than planned.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.