By Jonathan Burgos and Shani Raja
March 10 (Bloomberg) -- Asian stocks rose, lifting the regional benchmark index from its lowest level in more than five years, amid speculation recent declines were excessive.
HSBC Holdings Plc, Europe’s biggest bank, jumped 15 percent in Hong Kong as the government probed a 24 percent tumble in the stock yesterday. Cnooc Ltd., China’s largest offshore oil producer, climbed 6.4 percent as crude rose to a two-month high. Sony Corp. and Hyundai Motor Co. lost more than 2 percent after Warren Buffett said the U.S. economy “has fallen off a cliff.”
“You’ve got really good businesses that are trading at cheap prices, and if you think they are going to be there in two years’ time that’s a great fundamental investment,” said Paul Taylor, Sydney-based head of Australian equities at Fidelity International, which manages about $157 billion.
The MSCI Asia Pacific Index added 0.8 percent to 71.18 as of 3:49 p.m. in Tokyo, following a two-day, 3.5 percent drop that dragged the measure to its lowest close since August 2003. The gauge slumped 21 percent this year as the global recession decimated profits at companies from Sony to Toyota Motor Corp.
Japan’s Nikkei 225 Stock Average dropped 0.4 percent to 7,054.98, while HSBC led a 3.5 percent surge in Hong Kong’s Hang Seng Index. Most other markets gained, except for New Zealand, the Philippines and Malaysia.
Chartered Semiconductor Manufacturing Ltd., the world’s third-biggest maker of customized chips, slumped 37 percent on a rights offering. GD Midea Electric Appliances Co. fell 5 percent in Shanghai as 2008 profit declined. Sinotrans Shipping Ltd., a unit of China’s third-largest shipping group, rose 15 percent in Hong Kong after earnings last year more than doubled.
Raising Capital
Futures on Standard & Poor’s 500 Index added 1 percent today, following a 1 percent decline in the measure to 676.53 yesterday. The gauge is likely to drop to 600 or lower this year as the recession intensifies, Nouriel Roubini, the New York University professor who predicted the financial crisis, said.
Declines in the past year have dragged the average valuation of stocks in the MSCI Asia Pacific Index to 1.04 times book, near a record low of 1 reached in October. The gauge’s 14- day relative strength index, which measures how rapidly prices have risen or fallen, closed at 27 yesterday, below the level of 30 some traders use as a signal to buy.
HSBC rose 15 percent to HK$37.80, rallying from yesterday’s slump. Financial Secretary John Tsang said Hong Kong’s Securities and Futures Commission is investigating the drop. HSBC tumbled 42 percent though yesterday since announcing on March 2 plans to raise $17.7 billion from a rights offer.
Mitsubishi UFJ Financial Group Ltd., Japan’s biggest bank, climbed 3.7 percent to 395 yen, snapping a three-day, 11 percent decline. Mitsui Fudosan Co., Japan’s biggest developer, gained 2.2 percent to 904 yen, following a two-day, 12 percent slump.
Oversold?
Developers and financial shares “have been oversold, even though the nation’s banking system is relatively unscathed,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co. which oversees about $6.1 billion in assets.
Asia’s financial companies account for 2.5 percent of the almost $1.2 trillion of credit-related losses declared at institutions worldwide, according to data compiled by Bloomberg.
The MSCI Asia Pacific Financial index has slumped 27 percent this year and is valued at 15 times estimated profit, less than the main MSCI benchmark index’s 21 times.
In Hong Kong, Cnooc jumped 6.4 percent to HK$6.63. Woodside Petroleum Ltd., Australia’s second-largest oil producer, climbed 3.3 percent to A$37.09. Oil futures in New York rose 3.4 percent to $47.07 a barrel, the highest settlement price since Jan. 6.
Sony, which gets a quarter of its sales from the U.S., slipped 2.3 percent to 1,723 yen in Tokyo on concern demand will weaken as the world’s biggest economy deteriorates.
‘Downward Trajectory’
Hyundai Motor, South Korea’s largest carmaker, slumped 2.6 percent to 49,700 won. Toyota Motor Corp., which gets about 37 percent of revenue in North America, dropped 1.4 percent to 2,850 yen.
The turmoil that caused credit markets to freeze up helped drag the U.S., Europe and Japan into recessions. Buffett, whose Berkshire Hathaway Inc. posted its worst results ever in 2008, yesterday said the U.S. economy “can’t turn around on a dime,” and efforts to stimulate recovery may lead to inflation higher than in the 1970s.
“Hopefully, the accelerating deterioration of company profits will slow, but the earnings trend will remain in a downward trajectory,” Mamoru Shimode, an equity strategist at Resona Trust & Banking Co., said in an interview with Bloomberg Television.
Chartered Semiconductor plunged 37 percent to 13 cents. The company said it will raise $300 million from the sale of shares to existing shareholders at 7 cents each.
GD Midea Electric Appliances, China’s second-biggest appliance maker by value, fell 5 percent to 9.96 yuan in Shanghai after saying profit declined 15 percent last year.
Sinotrans Shipping rose 15 percent in Hong Kong to HK$1.91 after the company reported profits more than doubled last year as long-term contracts shielded it from the collapse in rates caused by the global recession.
To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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