By Jonathan Burgos and Masaki Kondo
March 11 (Bloomberg) -- Asian stocks surged, sending the benchmark index up the most in six weeks, after Citigroup Inc. and HSBC Holdings Plc said earnings are improving, and China’s factory and property spending jumped.
HSBC, Europe’s biggest bank, climbed 2.3 percent in Hong Kong after an official said there was “very strong” interest in its rights issue and profit in China jumped. Australia & New Zealand Banking Group Ltd. rose 3.2 percent after Citigroup said it was headed for its best quarter since 2007. BHP Billiton Ltd., the world’s No. 1 mining company, rose 4.2 percent after metals prices advanced yesterday.
“The global rally spurred by Citi may indicate a retreat of excess pessimism,” said Mitsushige Akino, who oversees $615 million at Ichiyoshi Investment Management Co. “With governments globally bringing out stimulus measures, the world’s economy is likely to start recovering in the second half.”
The MSCI Asia Pacific Index added 2.5 percent to 73.11 as of 5:40 p.m. in Tokyo, the sharpest jump since Jan. 27, when markets surged on plans by Japan and Australia to support banks and revive growth. The gauge has slumped 18 percent this year, extending last year’s record 43 percent drop as the global recession decimated profits.
Japan’s Nikkei 225 Stock Average rose 4.6 percent to close at 7,376.12, recovering from a 26-year low, while Hong Kong’s Hang Seng Index gained 2 percent. Most markets open for trading in the region advanced.
Toshiba, Proton
China’s Shanghai Composite Index fell 0.9 percent, reversing a gain as much as 2.1 percent, as a record drop in exports overshadowed a bigger-than-estimated increase in the nation’s factory and property investments.
Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The gauge leapt 6.4 percent in New York yesterday, its best gain since November as financial stocks rallied, led by Citigroup’s 38 percent climb.
Citigroup was profitable in January and February and is having its best quarter since the third quarter of 2007, Chief Executive Officer Vikram Pandit wrote in an internal memorandum.
Toshiba Corp., Japan’s biggest chipmaker, surged 9.5 percent after the Nikkei newspaper said the company may report an operating profit next fiscal year. Proton Holdings Bhd., Malaysia’s state-owned automaker, added 3.2 percent after the government said it will subsidize new car purchases. Chartered Semiconductor Manufacturing Ltd. sank to a record low in Singapore, two days after announcing a $300 million rights offer.
January Performance
HSBC’s January performance was better than expected across all segments and response by institutional investors to a rights offer was “very strong,” HSBC Asia Chief Executive Sandy Flockhart said in an interview with Bloomberg Television today.
The company, which operates the largest branch network among foreign banks in China, said pretax profit there rose 85 percent last year, benefiting from the nation’s stimulus efforts.
HSBC jumped 2.3 percent to HK$38.45, extending yesterday’s 14 percent surge and recovering further from a 24 percent plunge on March 9. Mizuho Financial Group Inc., the Japanese lender with the biggest subprime-related writedowns, rose 5.4 percent to 176 yen in Tokyo. Mitsubishi UFJ Financial Group Ltd., Japan’s biggest bank, climbed 4.1 percent to 411 yen.
“Valuations of Asian banks look attractive but going forward we have to determine which ones will be able to better manage their asset quality,” said Terrace Chum, who manages Greater China equities at Manulife Asset Management, which has about $240 billion in assets. “The asset quality of Asian banks is just starting to deteriorate. Let’s wait for another six months and see what happens.”
Bond Risk
ANZ gained 3.2 percent to A$13.15 in Sydney. Commonwealth Bank of Australia gained 3 percent to A$28.61. Tokio Marine Holdings Inc., Japan’s biggest casualty insurer, climbed 7.4 percent to 2,025 yen.
The cost of protecting investors in Asia-Pacific bonds from default fell from records, according to traders of credit default swaps, indicating investor perception of credit quality is improving. Meanwhile, New Zealand home sales rose to a 12- month high in February, adding to signs that low interest rates and falling prices are helping the property market recover.
Governments have stepped up efforts to avert what the World Bank predicts will be the first global economic contraction since World War II. The Yomiuri newspaper said today Japan’s government may propose a new economic plan as early as this month, and Malaysia yesterday unveiled an additional $16 billion in spending and tax incentives over the next two years. Chinese Premier Wen Jiabao reiterated last week the government’s pledge to “significantly increase” investment in 2009.
Exports Tumble
China’s spending on factories and property surged 26.5 percent to 1.03 trillion yuan ($150 billion) in the first two months of the year, the statistics bureau said today, exceeding analyst estimates. Anhui Conch Cement Co. Ltd., China’s biggest cement producer, rose 1.5 percent to HK$38 in Hong Kong.
A rally in Chinese stocks fizzled after data released by the customs bureau during the lunch-time break showed exports tumbled by a record 25.7 percent from a year earlier, while imports fell 24.1 percent.
“It’s going to be very difficult for China to shake off the global recession,” said Fraser Howie, a Singapore-based managing director at CLSA Asia-Pacific Markets. “China has become increasingly integrated with the international trading system so you can’t expect it to stand independent of global forces.”
BHP Billiton rose 4.2 percent to A$30.50 while smaller rival Rio Tinto Ltd. added 3.1 percent to A$49.80 after metals prices rallied. Nippon Mining Holdings Inc., Japan’s biggest copper producer, climbed 4.8 percent to 353 yen.
Raising Capital
Copper futures for May delivery jumped 2.7 percent in New York yesterday on speculation China increased imports of the metal. A measure of six primary metals traded in London advanced 2.7 percent. Copper retreated in Asian trading today.
Chartered Semiconductor slumped 12 percent to a record low of 11 cents in Singapore. The company said on March 9 it will sell shares to existing shareholders at a 66 percent discount, raising $300 million that will help shore up its balance sheet.
Proton gained 3.8 percent to 1.63 ringgit in Kuala Lumpur. The Malaysian government, announcing a second economic stimulus package yesterday, said it will finance part of a 5,000 ringgit ($1,358) discount on purchases of new Protons.
Toshiba rose 9.5 percent to 242 yen. The chipmaker will probably have operating profit of about 100 billion yen ($1 billion) in the year to March 2010, enabling it to break even, the Nikkei newspaper said today, without saying where it got the information.
To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net
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