Asian Stocks Rise Second Week Amid Government Policy Optimism

By Darren Boey

Feb. 7 (Bloomberg) -- Asian stocks rose for a second week as optimism that government measures worldwide will ease the financial crisis offset cuts in earnings forecasts at Mizuho Financial Group Inc. and Hitachi Ltd.

BHP Billiton Ltd. and Kawasaki Kisen Kaisha Ltd. led gains among mining and shipping companies after China cut some tariffs on raw material and component imports. Mitsubishi UFJ Financial Group Inc. led banks lower as rival Mizuho, Japan’s second- largest lender, cut its earnings target. Hitachi, which makes electrical equipment, slumped 6.5 percent after forecasting the biggest loss by an Asian electronics maker.

“Fiscal and monetary stimulus policies have helped improve sentiment,” said Binay Chandgothia, who oversees about $1.5 billion as chief investment officer at Principal Asset Management Co. in Hong Kong. “These measures will benefit the economy although there will be more earnings downgrades.”

The MSCI Asia Pacific Index rose 0.4 percent to 83.42 in the past five days, adding to the previous week’s 3.5 percent increase. The gauge is down 6.9 percent in 2009 amid mounting signs the global recession has hurt corporate profits.

Toyota Motor Corp., the world’s largest automaker, yesterday widened its loss prediction on slowing demand in the U.S. and in Japan. Mitsubishi UFJ cut its full-year profit forecast after the stock market closed yesterday.

The Nikkei 225 Stock Average added 1 percent last week, while Hong Kong’s Hang Seng index climbed 2.8 percent. China’s Shanghai Composite Index surged 9.6 percent.

Government Action

Stocks have fallen this year amid mounting signs the financial crisis, which has caused more than $1 trillion in credit-related losses, is hurting corporate earnings. With banks tightening lending, bankruptcies among Japan’s listed companies reached an annual postwar record last year, according to Tokyo Shoko Research Ltd.

Governments around the world are stepping up efforts to ease the crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year. A U.S. Treasury official said this week that Secretary Timothy Geithner will make a speech Feb. 9 and President Barack Obama will hold a news conference that will address a stimulus package.

Indonesia’s central bank this week lowered its benchmark interest rate for a third straight month. China’s government started investing a second allocation of a 4 trillion yuan ($580 billion) economic stimulus package, the official Xinhua News Agency reported.

China’s State Council, or Cabinet, also this week said that components and raw materials that “really needed to be imported” will be exempted from import duties.

Baltic Dry

BHP, which gets about 20 percent of its revenue in China, climbed 5.7 percent to A$32.23 on speculation sales to Asia’s second-largest economy will revive. China Mobile, the world’s No. 1 wireless-phone company by users, gained 7.7 percent in Hong Kong to HK$75.90.

Kawasaki Kisen Kaisha, Japan’s No. 3 shipping line, soared 20 percent in the week to 401 yen. Mitsui O.S.K. Lines Ltd., operator of Japan’s largest fleet of iron-ore ships, jumped 19 percent to 629 yen. STX Pan Ocean Co., South Korea’s biggest bulk carrier, surged 17 percent to 11,900 won.

The Baltic Dry Index of prices for shipping commodities soared 15 percent on Feb. 4, the most since at least 1985. The measure climbed in the week amid speculation iron-ore shipments to China will increase.

Mitsubishi UFJ slumped 5.9 percent to 480 yen. The company cut its full-year profit forecast by 77 percent on rising bad loans and soured stock holdings. Japanese banks and insurers accounted for 57 percent of the $31.1 billion of credit-related losses declared by Asian financial companies, data compiled by Bloomberg show.

Hitachi, Toyota

Mizuho lost 0.4 percent to 226 yen. The company turned to a 145.1 billion yen loss in the three months ended Dec. 31 from a 66 billion yen profit a year earlier.

Hitachi slumped 6.5 percent to 275 yen after forecasting a record 700 billion yen ($7.8 billion) loss in the year ending March 31 amid slumping demand.

Toyota, which also lost its top rating from Moody’s Investors Service in the week, ended the week 5.6 percent higher at 3,090 yen. The company said its operating loss in the year ending March may total 450 billion yen ($4.95 billion) compared with company’s previous estimate of a 150 billion yen shortfall.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.