Asian Stocks Gain as G-20 Agreement Fuels Recovery Optimism

By Shani Raja

Sept. 7 (Bloomberg) -- Asian stocks rose for a third day, led by finance and technology companies, as the Group of 20 nations agreed on steps to shore up the global financial system.

HSBC Holdings Plc, Europe’s largest lender, gained 2 percent in Hong Kong. Toshiba Corp. climbed 3.7 percent in Tokyo after saying it may contract out some production to cut costs. Technology companies also advanced as a $1.8 billion bid for Chartered Semiconductor Manufacturing Ltd. fueled merger speculation. China Unicom (Hong Kong) Ltd. gained 2.2 percent after announcing a $1 billion share swap with Telefonica SA.

The MSCI Asia Pacific Index rose 0.9 percent to 113.81 as of 12:39 p.m. in Tokyo, taking a three-day advance to 1.2 percent. The gauge climbed 61 percent from a more than five-year low on March 9 on speculation stimulus measures around the world will revive the global economy.

“It’s clear there’s an ongoing commitment by the authorities to make sure this recovery works,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $75 billion. “Together with the evidence of a recovery we’re already seeing, it points to a continuing improvement in the economic outlook.”

Japan’s Nikkei 225 Stock Average climbed 0.9 percent. Canon Inc., which gets 28 percent of its sales from the Americas, gained 2.6 percent after the U.S. government said companies cut fewer jobs than estimated in August.

U.S. Jobs Report

Futures on the S&P 500 were little changed. The stock gauge climbed 1.3 percent on Sept. 4 after a Labor Department report showed U.S. companies cut fewer jobs last month than economists had estimated. The unemployment rate rose to 9.7 percent, the highest level in 26 years.

HSBC, which is based in London, gained 2 percent to HK$83.65. Commonwealth Bank of Australia rose 1.2 percent to A$46.23. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, added 0.7 percent to 557 yen.

Finance chiefs from the G-20 nations concluded weekend talks in London with an agreement on a regulatory blueprint aimed at avoiding a repeat of the global financial crisis that has caused at least $1.6 trillion of losses since 2007.

The G-20 measures include forcing banks to curb leverage and raise the amount and quality of assets they keep in reserve once growth takes hold.

“The G-20 has shown once again that governments from around the world can come together to agree on the global governance the new global economy needs,” U.K. Prime Minister Gordon Brown said.

Relatively Cheap

Stocks in the MSCI Asia Pacific Index are priced at an average 1.5 times book value, lower than 2.1 times for the Standard & Poor’s 500 Index in the U.S. and 1.6 times for Europe’s Dow Jones Stoxx 600 Index.

“Investors are focusing on the relative cheapness of equities,” said Hiroichi Nishi, an equities manager at Tokyo- based Nikko Cordial Securities Inc.

Toshiba, Japan’s largest chipmaker, climbed 3.7 percent to 483 yen. The company will contract out production of large-scale integrated circuits to overseas chipmakers as part of efforts to cut production costs, the Nikkei newspaper reported. Keisuke Ohmori, a spokesman for Toshiba, said no decision had been made.

Technology companies accounted for 17 percent of the MSCI Asia Pacific Index’s gain today as Advanced Technology Investment Co., owned by the government of Abu Dhabi, said it plans to acquire Chartered Semiconductor for S$2.5 billion ($1.8 billion) in cash. Chartered was halted from trading in Singapore.

Unicom, Telefonica

“Companies are starting to realize there are attractive valuations out there, and taking advantage of it,” AMP’s Naeimi said.

Unicom, China’s second-biggest wireless carrier, gained 2.2 percent to HK$10.98. Telefonica, Europe’s second-biggest phone company, will pay $1 billion to boost its stake in Unicom to 8.1 percent from 5.4 percent, the two companies said in a joint statement yesterday.

Telefonica also agreed to sell an equal value of shares to Unicom, which may gain a stake of as much as 0.89 percent in the Spanish company, according to the statement.

BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest and third-biggest mining companies, are considering a A$1 billion ($853 million) merger of their Canadian diamond operations, the Australian reported, without saying where it got the information.

Rio Tinto gained 1.3 percent to A$55.94 in Sydney, while BHP was little changed at A$36.59.

Canon rose 2.6 percent to 3,560 yen on optimism demand for its digital cameras will increase as global demand picks up. Toyota Motor Corp., which gets 31 percent of its revenue in North America added 1 percent to 3,890 yen.

Greater-than-estimated earnings and economic reports have fueled the MSCI Asia Pacific Index’s rally since March. A survey released today showed Australia’s building industry contracted at a slower pace last month amid higher demand for residential dwellings. New Zealand’s house prices rose for a fourth month in August, the government’s valuation agency reported.

To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net.