Most Asian Stocks Advance on Government Efforts to End Crisis

By Shani Raja

Jan. 19 (Bloomberg) -- Most Asian stocks advanced, led by commodity and finance companies, amid optimism government efforts to end the credit crisis will bolster corporate earnings.

Rio Tinto Group, the world’s No. 3 mining company, surged 5.7 percent in Sydney after metals prices climbed on Jan. 16 and Barack Obama’s top economic adviser said the U.S. will support consumers, local governments and businesses. Standard Chartered Plc paced gains among lenders on speculation the U.K. will announce the second British bank rescue in three months. HSBC Holdings Plc fell 3.7 percent in Hong Kong after a shareholder said the company may need to sell shares.

“We’re seeing a lot of measures being taken to try and improve the situation,” said Matt Riordan, who helps manage $3 billion at Paradise Investment Management in Sydney. “If there’s increasing confidence that companies won’t be forced to come to market to raise money, we should see a very strong recovery in share prices.”

The MSCI Asia Pacific Index added 0.3 percent to 84.90 as of 3:15 p.m. in Tokyo, with about five stocks advancing for every four that fell. South Korea’s Kospi Index rose 1.4 percent, while China’s CSI 300 Index climbed 1.2 percent.

MSCI’s Asian gauge slumped 43 percent in 2008, its worst year on record, as the deepening financial crisis fueled a global recession that curbed demand for the region’s raw materials, automobiles and computers. The average valuation of the measure’s constituents has fallen about a fifth in the past year to 14 times estimated profit.

U.S. markets are closed today for a holiday. In New York, the Standard & Poor’s 500 Index rose for a second day on Jan. 16, adding 0.8 percent.

Biggest Losers

Datang International Power Generation Co. gained 4 percent in Shanghai after a newspaper reported the industry will get state aid. LG Display Co., the world’s second-largest liquid- crystal-display maker, jumped 7.7 percent in Seoul after saying product prices may increase.

Gauges of raw materials and energy shares posted the biggest gains of 10 industry groups on the MSCI Asia Pacific Index today. The two measures were the MSCI Asia Pacific’s biggest losers last year as the slowdown in the global economy, sparked by a U.S. housing recession, threatened to hurt commodity demand.

Government reports on Jan. 16 showed that U.S. consumer prices and industrial production tumbled in December in the U.S. as a record slide in retail sales destroyed companies’ pricing power and idled more than a quarter of factory capacity.

‘Very Different Way’

The administration of President-elect Obama will deploy the second half of the $700 billion Troubled Asset Relief Program “in a very different way,” said Lawrence Summers, the president-elect’s top economic adviser. The TARP may be directed to housing, automobile loans, consumer credits, small business and municipalities rather than banks, he said.

“A lot of the data is still bad, but the markets are trying to find something positive,” said Prasad Patkar, who helps manage $800 million at Platypus Asset Management in Sydney. “If authorities are able to stem job losses by alleviating the impact of the credit crunch on businesses, it will be healthy for the U.S. economy as a whole.”

Rio Tinto, the world’s third-biggest mining company, surged 5.7 percent to A$40.55. BHP Billiton Ltd., the world’s largest mining company, added 1.7 percent to A$30.38. Mitsubishi Corp., which gets more than half its profit from trading commodities, gained 2.6 percent to 1,290 yen.

Copper futures climbed 5.1 percent on Jan. 16, the sharpest gain in seven days, while gold advanced 4 percent, breaking a four-day losing streak.

Weaker Yen

Inpex Corp., Japan’s largest energy explorer, rose 2.2 percent to 709,000 in Tokyo. Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, advanced 2.3 percent to A$34.29. Oil futures in New York jumped 3.1 percent on Jan. 16, the most since Jan. 5, to $36.51 a barrel.

Shares of Japanese exporters advanced as a weaker yen boosted the value of overseas sales when converted into local currency. The yen depreciated to as much as 91.03 per dollar, the weakest level in 10 days, from 90.46 at the close of stock trading in Tokyo on Jan. 16.

Honda Motor Co., which gets 51 percent of its profit from North America, rose 4 percent to 2,090 yen, while TDK Corp. jumped 2.7 percent to 3,480 yen. TDK, the world’s largest maker of magnetic heads used in disk drives, gets 11 percent of its revenue from the Americas.

Standard Chartered, a British bank that makes two-thirds of its profit in Asia, climbed 2.7 percent to HK$92.75 in Hong Kong. Hana Financial Group Inc., which controls South Korea’s fourth- biggest bank, added 1.7 percent to 21,300 won.

Bank Rescue

The U.K. government will propose insurance to underwrite mortgage-backed debt and toxic assets, said a person familiar with the plan. The government may increase its stake in Royal Bank of Scotland Group Plc and Lloyds Banking Group to reduce their borrowing costs, the person said.

The new measures would add at least 100 billion pounds ($149 billion) to the 250 billion pounds committed by the government in October to underwrite a financial system choked with bad debt. The financial crisis has caused more than $1 trillion of writedowns and losses at institutions worldwide.

Financial shares also gained as the cost of protecting Asia-Pacific corporate bonds against default declined. The Markit iTraxx Japan index fell 8 basis points to 292, BNP Paribas SA prices show. The Markit iTraxx Australia index was quoted 10 basis points lower at 305, ABN Amro Holding NV said.

HSBC, Europe’s largest bank, lost 3.7 percent to HK$61.80. Knight Vinke Asset Management LLC predicted the lender will be forced to sell shares for the first time since the financial crisis began in 2007 to plug a “substantial” capital shortfall.

Toshiba, LG Display

Datang rose 4 percent to 7.02 yuan and Huadian Power International Co., a unit of the fourth-largest Chinese power generator, advanced 0.8 percent to 3.99 yuan. China’s power generators and distributors will get financial support from the government, the China Business newspaper reported.

LG Display jumped 7.9 percent to 26,000 won. Prices of TV panels “won’t fall further and may actually increase,” Chief Executive Officer Kwon Young Soo said Jan. 16. Demand for televisions will rise in markets including China, Kwon said.

Toshiba Corp., Japan’s biggest maker of nuclear reactors, climbed 6.5 percent to 411 yen after the Yomiuri newspaper reported the company will build two reactors in the U.S. for NRG Energy Inc.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.