Asian Stocks Pare Weekly Loss on Yen Drop, China Stimulus

By Patrick Rial and Zhang Shidong

Jan. 16 (Bloomberg) -- Asian stocks rose, paring the benchmark index’s steepest weekly loss in two months, as the weaker yen boosted Japan’s electronics and auto makers and speculation grew China will pass another stimulus package.

Seiko Epson Corp., the world’s No. 3 maker of inkjet printers, soared 9.9 percent. China’s Shenyang Machine Tool Co. rose 3.6 percent after the Shanghai Securities News said the government may extend aid to machinery companies. Chipmaker Hynix Semiconductor Inc. jumped 5.8 percent after market leader Intel Corp. said profitability may improve as customers rebuild inventories. Equities extended gains after the U.S. government increased its rescue package for Bank of America Corp.

The MSCI Asia Pacific Index gained 2.2 percent to 84.90 as of 3:42 p.m. in Tokyo. The gauge, which fell by the most last year in its two-decade history as the U.S. housing crisis sparked a global recession, is set for a 5.5 percent drop this week, the most since the period ended Nov. 21.

“Investors are getting more optimistic with more stimulus plans for different industries in the pipeline,” said Xu Lirong, a fund manager at Franklin Templeton Sealand Fund Management in Shanghai, which oversees the equivalent of $2.56 billion. “Liquidity is improving and moving to equities.”

Japan’s Nikkei 225 Stock Average added 2.6 percent to 8,230.15. China’s CSI 300 Index advanced 3.2 percent, leading gains among the region’s markets.

Weaker Yen

U.S. stocks climbed yesterday, with the Standard & Poor’s 500 Index finishing the day 0.1 percent higher. S&P futures rose 1.2 percent today after the Senate voted to release the second half of a bank bailout fund and the government expanded its investment in Bank of America, the nation’s largest lender.

Seiko Epson, which generates two-thirds of its revenue abroad, rallied the most since Nov. 4, advancing 9.9 percent to 1,345 yen. Honda Motor Co., Japan’s No. 2 automaker, rose 8 percent to 2,010 yen. Citizen Holdings Co., Japan’s second- largest watchmaker, surged 7.7 percent to 337 yen.

The yen weakened to as low as 90.57 against the dollar today from 88.97 at the 3 p.m. close of stock trading in Tokyo yesterday. A weaker yen boosts the value of overseas sales for Japanese companies.

Shenyang, China’s No. 2 listed industrial machinery maker, rose 3.8 percent to 5.47 yuan. Weichai Power Co. Ltd., a maker of high-speed heavy-duty diesel engines, jumped 5 percent to 23.20 yuan.

‘More Optimistic’

China’s National Development & Reform Commission and the Ministry of Industry & Information Technology will review a stimulus package today to help machinery companies, Shanghai Securities reported, without citing anyone. The country’s benchmark CSI 300 gained 5.1 percent this week amid speculation the central bank will cut benchmark interest rates for the sixth time since September.

Hynix added 5.8 percent to 6,950 won in Seoul. Elpida Memory Inc., Japan’s largest memory chipmaker, soared 14 percent to 55 yen. Advanced Semiconductor Engineering Inc., the world’s biggest tester and packager of semiconductor chips, gained 2.2 percent to NT$11.85 in Taipei.

Intel, the world’s top maker of semiconductors, said yesterday profit margins may bottom out in the current quarter and rebound thereafter as orders pick up from customers running low on inventories. The shares rose in late trading despite a 90 percent drop in net income last quarter.

The Bloomberg Asia Pacific Semiconductors Index has plunged 39 percent in the last six months as analysts surveyed by Bloomberg reduced profit estimates by 72 percent amid a slump in demand and chip prices.

Rebuild Inventories

“We need to rebuild inventories, and that could probably happen in the second or third quarter,” Didier Duret, chief investment officer at ABN Amro in Geneva, said in an interview with Bloomberg Television. “That would be the real kick-start of the recovery process.”

Woori Finance Holdings Co. paced advances by Asian financial companies after the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. jointly announced the Bank of America rescue. The government will invest $20 billion more in the bank and guarantee $118 billion of its assets to help it absorb Merrill Lynch & Co.

Woori, which control’s South Korea’s second-largest bank, rose 3.2 percent to 7,800 won. Hana Financial Group Inc., operator of the nation’s fourth-biggest lender, added 2.2 percent to 20,950 won, rebounding from a 5.4 percent drop after Moody’s Investors Service placed the bank on review for a downgrade. China Construction Bank Corp., the nation’s second largest, surged 4.1 percent in Shanghai trading.

U.S. Government ‘Willing’

“This is further evidence for the global markets that the U.S. government is willing to spend U.S. taxpayer money to shore up U.S. financial institutions,” Ed Rogers, chief executive officer of hedge-fund adviser Rogers Investment Advisors Y.K., said regarding Bank of America.

HSBC Holdings Plc, Europe’s biggest bank, tumbled 2.9 percent to HK$64.05, bringing this week’s loss to 14 percent. Goldman Sachs Group Inc. named the shares a “conviction sell,” citing effects from of the worsening U.S. economy and falling property prices.

Chemical firms rallied after crude oil prices plunged 5 percent, lowering production costs. Kingboard Chemical Holdings Ltd., a Hong Kong-based maker of laminates and industrial materials, rose 8.1 percent to HK$13.62. Asahi Kasei Corp., a maker of synthetic fibers, jumped 6.5 percent to 379 yen after Daiwa Institute of Research rated the shares “outperform” in new coverage.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Zhang Shidong in Shanghai at szhang5@bloomberg.net