By Jonathan Burgos and Masaki Kondo
March 16 (Bloomberg) -- Asian stocks rose, led by financial companies and automakers, as Group of 20 finance ministers vowed to combat the global recession and OPEC refrained from cutting output quotas to bolster economic growth.
Mizuho Financial Group Inc., which has the most credit- related losses of any Asian bank, gained 5.6 percent in Tokyo following a pledge by G-20 officials for coordinated action to clean up banks’ toxic assets. Mazda Motor Corp. jumped 8.4 percent on optimism production will rebound. Virgin Blue Holdings Ltd., Australia’s No. 2 airline, climbed 17 percent after reporting surging passenger figures and as oil slumped on the Organization of Petroleum Exporting Countries’ decision.
“People in the market have calmed down and started noticing authorities worldwide are doing what they can to revive the global economy and restore the financial system,” said Kiyoshi Ishigane, a strategist at Tokyo-based Mitsubishi UFJ Asset Management Co., which oversees about $61 billion.
The MSCI Asia Pacific Index rose 2 percent to 76.24 as of 6:07 p.m. in Tokyo, with about seven stocks gaining for every two that declined. Japan’s Nikkei 225 Stock Average climbed 1.8 percent to 7,704.15, while Hong Kong’s Hang Seng Index jumped 3.6 percent. All markets in Asia rose except in South Korea, Malaysia, Thailand, Sri Lanka and the Philippines.
Pakistan’s Karachi Stock Exchange 100 Index rose 5.3 percent, the most since June 24, 2008, after Prime Minister Yousuf Raza Gilani pledged to reinstate Supreme Court justices fired under military rule in 2007.
Political Developments
Foxconn International Holdings Ltd., the world’s biggest contract maker of mobile phones, soared 15 percent in Hong Kong following a brokerage upgrade. HSBC Holdings Plc, Europe’s biggest bank, rose 4.6 percent after the South China Morning Post quoted the company’s chief financial officer as saying the lender won’t need a bailout from the British government and Barclays Plc said it had a “strong start” to 2009.
Futures on the Standard & Poor’s 500 Index gained 0.9 percent. The benchmark gauge rose 0.8 percent on March 13, capping an 11 percent rally for the week, as takeover speculation lifted health-care companies.
The MSCI Asia Pacific Index jumped 3.9 percent last week, its best performance this year. The gauge is still down 15 percent in 2009, extending last year’s record 43 percent drop as the global recession decimated profits at companies from Mazda to Canon Inc., the world’s biggest maker of digital cameras.
Estimated earnings for companies included in the benchmark are down 66 percent from a year ago, according to data compiled by Bloomberg. Companies on the index trade at an average of 1.1 times book value, near its October record low of 1 times book.
‘Key Priority’
Mizuho Financial, which has declared $7.6 billion of credit-related losses, added 5.6 percent to 189 yen. Sumitomo Mitsui Financial Group Inc., Japan’s third-biggest lender, gained 6 percent to 3,020 yen. Mitsubishi UFJ Financial Group Inc., the nation’s publicly traded bank, jumped 5.3 percent to 441 yen in Tokyo.
The Bank of Japan is considering buying subordinated debt from banks to shore up capital, the Nikkei reported today.
The cost of protecting investors in Asian bonds from default fell after the G-20’s weekend pledges. The Markit iTraxx Japan index of credit-default swaps dropped 5 basis points, Barclays Capital prices show. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan also lost 5 basis points, according to ICAP Plc.
G-20 officials at the weekend outlined guidelines on how governments should rid banks of distressed securities. The “key priority” now is to restore lending, a G-20 statement on March 14 said. Federal Reserve Chairman Ben S. Bernanke said in an interview broadcast by CBS Corp. yesterday that the risk of depression has been “averted.”
Time To Invest?
Stocks rose in Asia even as Germany’s Chancellor Angela Merkel provided her third rebuttal in as many days to calls for more government stimulus by U.S. President Barack Obama. Current investments should first be given a chance to work, she told reporters on March 14.
China and other emerging markets offer value over the next two years as growth picks up, investor Marc Faber said.
“Rapidly growing countries have setbacks from time to time,” Faber, the publisher of the Gloom, Boom & Doom report, told Bloomberg Television in an interview in Hong Kong. “I think we’re going to test the lows again but over the next two years, it’s probably a good time to invest.”
Mazda, partly owned by Ford Motor Co., climbed 8.4 percent to 155 yen. The company will resume full production at two domestic plants in July, the Nikkei newspaper said on March 14. Nissan Motor Co. Ltd., Japan’s No. 3 automaker, rose 3 percent to 352 yen. Hyundai Motor Co., the biggest South Korean automaker, rose 3.3 percent in Seoul.
Foxconn, HSBC
Virgin Blue climbed by a record 17 percent to 20.5 Australian cents in Sydney. International passenger numbers rose 33.4 percent in January from a year earlier, while domestic passengers increased 7.4 percent, the airline said.
Airlines also advanced on optimism fuel costs will decline after oil prices in New York tumbled as much as 5.2 percent to $43.85 per barrel in trading today. Qantas Airways Ltd., Australia’s largest carrier, rose 3.1 percent to A$1.65. Eva Airways Corp. jumped 6.9 percent to NT$7.47 in Taipei.
Woodside Petroleum Ltd., Australia’s second-largest oil producer, fell 4.6 percent to A$36.04 in Sydney. Inpex Corp., Japan’s largest oil explorer, slipped 4.6 percent to 644,000 yen in Tokyo.
Foxconn gained 15 percent to HK$2.85 in Hong Kong after Macquarie Group raised its rating for the stock to “outperform” from “neutral” because it expects the company to return to profit this year.
No Bailout Needed
HSBC, which is raising $17.7 billion from a rights offering, rose 4.6 percent to HK$40 in Hong Kong. The bank won’t need a bailout from the British government even if economic conditions in the U.S. and the U.K. worsen, the South China Morning Post reported, citing Chief Financial Officer Douglas Flint.
Philippine Long Distance Telephone Co., the nation’s biggest phone company, slumped 12 percent to 1,895 pesos, after agreeing to raise its stake in Manila Electric Co., the biggest local power retailer. JPMorgan Chase & Co. downgraded its rating on the stock to “neutral” from “overweight”.
Buying the stake “directly raises the risk profile of PLDT,” JPMorgan analysts Luis Hilado and Tim Storey wrote in a report dated March 13.
To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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