By Patrick Rial and Shani Raja
April 2 (Bloomberg) -- Asian stocks surged, giving the regional benchmark index its biggest gain in five months, as U.S. auto sales rose from a 27-year low and Treasury Secretary Timothy Geithner said economies are showing “traction.”
Nissan Motor Co., which gets 41 percent of its sales in North America, soared as much as 21 percent, the most since 1974. HSBC Holdings Plc, Europe’s largest bank, rose 16 percent in Hong Kong as Geithner said ahead of the Group of 20 leaders meeting in London that there are “encouraging signs” in markets. China Petroleum & Chemical Corp., Asia’s biggest oil refiner, climbed 6.2 percent as Goldman Sachs Group Inc. recommended investors buy the stock.
“The rally illustrates that there is money available to put to work when risk appetite does return,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Management, which holds $90 billion. “There’s also perhaps an expectation we’ll get some significant policy response out of the G-20.”
The MSCI Asia Pacific Index jumped 4.6 percent to 86.09, the steepest climb since Oct. 30, at 7:44 p.m. in Tokyo. The gauge has surged 22 percent since falling to the lowest in more than five years on March 9 amid speculation the worst of the financial crisis is over. A gain of 20 percent is the technical definition of stocks entering a bull market.
Japan’s Nikkei 225 Stock Average added 4.4 percent to 8,719.78, the most since March 13. Hong Kong’s Hang Seng Index jumped 7.4 percent, erasing its declines for the year. South Korea’s Kospi Index rose 3.5 percent to the highest since Oct. 15. All markets in the region rose except Sri Lanka.
Improving Economy?
OneSteel Ltd., the second-largest Australian steelmaker, rose 8.5 percent after Macquarie Group Ltd. upgraded the stock. Electronics maker Pioneer Corp. climbed 16 percent in Tokyo as employees at its factories accepted payments to quit. China Resources Land Ltd. surged 14 percent in Hong Kong after a newspaper reported Shanghai’s residential property sales climbed.
Futures on the Standard & Poor’s 500 Index jumped 2.1 percent. The gauge rose 1.7 percent yesterday as the Institute for Supply Management said its factory index increased to 36.3 last month, a third-consecutive advance. U.S. pending home resales gained 2.1 percent in February, exceeding some economists’ forecasts.
New cars sold in March at an annual rate of 9.86 million units, according to Autodata Corp., a million more than the average estimate of analysts in a Bloomberg survey.
Nissan rallied 14 percent to 438 yen, having earlier soared 21 percent. Toyota Motor Corp., the world’s largest automaker, jumped 5.5 percent to 3,450 yen.
Toyota posted a 39 percent drop in U.S. sales last month, narrower than the 41 percent tumble analysts in a Bloomberg survey estimated. Sales at Nissan and Honda Motor Co. and fell 38 percent and 36 percent respectively, whereas analysts had projected a 42 percent slump for both companies.
Government Action
Honda surged 11 percent to 2,735 yen. South Korea’s Hyundai Motor Co., which reported a 4.8 percent drop in U.S. sales, added 4.5 percent to 60,700 won.
“People are realizing that they don’t have to be as pessimistic as they have been,” said Yoji Takeda, who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “I’m shifting to cyclical shares such as automakers and financials from defensives to reflect a possible recovery.”
The MSCI Asia Pacific Index’s climb from its March low cut this year’s loss to 3.9 percent, as governments from the U.K. to Japan stepped up buying of bonds to spur the flow of credit and the U.S. unveiled a plan to relieve banks of toxic mortgage securities. Still, about half of Asia’s companies trade at below book value, according to data compiled by Bloomberg.
The G-20 summit convenes in London as some reports suggest the pace of decline is easing. U.S. durable-goods orders and home sales rose in February and Chinese urban investment surged 26.5 percent in the first two months of the year. The MSCI World Index last month rallied 7.2 percent, the most since April 2003.
Banks Advance
“You’re seeing encouraging signs of improvement in our markets,” Geithner said yesterday in a Bloomberg Television interview in London, where he is attending the G-20 meeting with President Barack Obama.
HSBC surged 15 percent to HK$49.40. National Australia Bank Ltd. rose 5.8 percent to A$21.50. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded lender, climbed 6.7 percent to 528 yen.
A measure of financial companies included in MSCI’s Asia gauge added 6.4 percent. It dropped 27 percent in the last six months, the most among 10 industry groups, as losses from the credit crisis climbed to $1.29 trillion.
China Petroleum climbed 6.2 percent to HK$5.47 in Hong Kong. The stock was raised to “buy” from “neutral” at Goldman Sachs on optimism fuel-price reforms in China will boost earnings.
China Real Estate
OneSteel surged 8.5 percent to A$2.31 as it was upgraded to “neutral” from “underperform” at Macquarie. Rio Tinto Group, the world’s third-largest mining company, jumped 4.6 percent to A$57.96, as copper prices in New York gained for a third day.
Pioneer climbed 16 percent to 156 yen. The electronics maker said 773 employees accepted payments to quit at two factories. Eliminating the jobs will cost 18 billion yen ($182 million), the company said in a statement.
China Resources Land, a government-controlled property developer, surged 14 percent to HK$14. Guangzhou R&F Properties Co. rallied 18 percent to HK$11.54, the fourth-biggest advance on the MSCI Asia Pacific Index.
Home sales in Shanghai totaled 1.5 million square meters in March, a 91 percent increase from the previous month, Shanghai- based China Business News said.
To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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