By Patrick Rial
April 1 (Bloomberg) -- Asian stocks rose for the first time in three days on speculation Japanese and South Korean automakers will benefit from the possible bankruptcies of General Motors Corp. and Chrysler LLC.
Honda Motor Co., which generates 51 percent of its sales in North America, climbed 6.7 percent in Tokyo and Hyundai Motor Co. added 4.7 percent in Seoul. U.S. President Barack Obama believes a quick, negotiated bankruptcy is the most likely way for GM to restructure and is prepared to let Chrysler go bankrupt, people familiar with the matter said. Elpida Memory Inc., Japan’s largest computer memory chipmaker, soared 15 percent after being chosen to join Taiwan Memory Corp. in reorganizing the industry.
“Less competition should help automakers expand market share, not just in the U.S., but all around the world,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages $53 billion. “I expect the rally will continue for another month or two. Many economic figures are showing signs of improvement.”
The MSCI Asia Pacific Index gained 1.4 percent to 82.02 as of 2:51 p.m. in Tokyo, following a two-day, 5.3 percent slump. The gauge rose 7.6 percent last month, its first advance in 2009, as some investors bet governments worldwide will succeed in reviving global growth. Consumer-related shares, including carmakers, accounted for 38 percent of the measure’s climb.
China Unicom, OneSteel
Japan’s Nikkei 225 Stock Average rose 2.8 percent to 8,337.67. South Korea’s Kospi Index climbed 2.2 percent. Markets in the region advanced except in Australia, New Zealand, Singapore, Hong Kong, Thailand, the Philippines and India.
China Unicom (Hong Kong) Ltd. plunged 8.9 percent after the company’s earnings missed analyst estimates, prompting Citigroup Inc. to recommend selling the shares. Santos Ltd., Australia’s No. 3 oil producer, jumped 2.6 percent following gains in oil prices. OneSteel Ltd., the country’s No. 2 steelmaker, slumped 5.3 percent after extending production cuts.
Futures on the Standard & Poor’s 500 Index slumped 1.6 percent, following the gauge’s 1.3 percent rally yesterday. Futures accelerated declines as news of the U.S. government’s plans for the automakers emerged.
Obama will let Chrysler go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat SpA, said members of Congress who have been briefed on the subject and two other people familiar with the administration’s deliberations.
Automaker Bankruptcies
Honda climbed 6.7 percent to 2,470 yen. Toyota Motor Corp., the world’s largest automaker, jumped 5.1 percent to 3,280 yen. Hyundai Motor rose 4.7 percent to 58,100 won.
“People here are expecting GM and Chrysler won’t survive long,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion. “The initial impact is probably big if they really go bankrupt.”
U.S. March auto sales data due later today are expected to come in at an annualized rate of 8.8 million vehicles, which would be the lowest since December 1981, according to analysts in a Bloomberg News survey. Japan’s auto sales slumped 32 percent in March, the Japan Automobile Dealers Association said in a statement today.
Companies on the MSCI Asia Pacific Index are valued at an average 25 times estimated earnings. Analysts have lowered their profit projections by two-thirds in the last 12 months, according to data compiled by Bloomberg.
Tankan Survey
The gauge declined 9.7 percent last quarter amid growing signs the global recession is hurting corporate earnings. Stocks today shrugged off a report showing South Korean exports slumped for a fifth month in March and the Bank of Japan’s quarterly Tankan survey, which was worse than economists predicted.
The Tankan, which tracks sentiment among large manufacturers, fell to a record low of minus 58. Capital spending plans only dropped by half as much as economists had forecast and managers expect a rebound in profits later this year. Prime Minister Taro Aso said yesterday his administration will compile a third stimulus package by mid-April.
“Though the Tankan report is awful, businesses are getting out of the worst period in terms of earnings,” said Mitsubishi UFJ’s Ishigane. “Governments including Japan are introducing a series of stimulus packages and what’s important is not the quality of the plan but the quantity of money spent.”
Aso will join leaders from the Group of 20 nations at a London summit starting tomorrow. Obama will be hoping to devise a coordinated response to the financial crisis at the meeting, according to Mike Froman, the president’s deputy national security adviser for economic affairs.
Chipmakers Climb
Elpida soared 15 percent, the equivalent of its daily limit, to 780 yen, the second-biggest gain in the MSCI World Index, after it beat U.S. rival Micron Technology Inc. for the partnership with Taiwan Memory, the memory-chip company set up by the government.
Powerchip Semiconductor Corp., Taiwan’s largest memory-chip maker, climbed by its daily 6.8 percent limit to NT$4.71. ProMOS Technologies Inc., the most unprofitable Taiwan memory-chip supplier, surged 6.8 percent to NT$1.41.
China Unicom slumped 8.9 percent to HK$7.54. Sales from continuing operations fell in 2008, while net income jumped 58 percent due to a one-time gain from the sale of a unit. Michael Meng, an analyst at Citigroup in Hong Kong, cut the shares to “sell” from “hold,” as margins are likely to deteriorate as competition intensifies.
Santos climbed 2.6 percent to A$17.29. Inpex Corp., Japan’s largest oil explorer, rose 3.8 percent to 709,000 yen. Cnooc Ltd., China’s largest offshore oil producer, added 1 percent to HK$7.76.
Crude oil for May delivery rose 2.6 percent to $49.66 a barrel in New York yesterday, capping an 11 percent gain over three months. A measure of six primary metals traded in London advanced 2.1 percent.
OneSteel slumped 5.3 percent to A$2.13 after saying output from its Sydney and Laverton electric-arc furnaces will be cut to 725,000 metric tons. That’s deeper than the previously announced cut to 850,000 tons. BlueScope Steel Ltd., Australia’s largest producer, dropped 3.5 percent to A$2.48.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
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