Asian Stocks Climb to 15-Month High on Yen, Fed Beige Book

By Shani Raja

Dec. 3 (Bloomberg) -- Asian stocks rose, driving the MSCI Asia Pacific Index to a 15-month high, as a weaker yen boosted Japanese exporters and the Federal Reserve said the U.S. economy improved.

Sony Corp., which gets 23 percent of its sales in the U.S., surged 6 percent in Tokyo, and Honda Motor Co. added 4.2 percent. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal- Mart Stores Inc., rose 4.3 percent in Hong Kong as the Fed’s Beige Book showed the economy expanded or improved “modestly” across the U.S. from October to mid-November. Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipping line, advanced 6.5 percent on higher freight rates.

The MSCI Asia Pacific Index rose 1.8 percent to 121.97 as of 4:36 p.m. in Tokyo, poised to close at the highest level since Sept. 1, 2008. It has gained 7.1 percent this week, headed for its steepest weekly increase since the period ended May 8. The gauge has climbed 73 percent from its lowest in more than five years on March 9 on signs government stimulus measures are reviving global growth.

“Things are normalizing,” said Prasad Patkar, who helps manage about $1.7 billion at Platypus Asset Management in Sydney. “The U.S. recovery might be more subdued than elsewhere, but it’s still a recovery. As long as there are no systemic shocks, there is no underlying, fundamental reason for things to start going backwards.”

Japan’s Nikkei 225 Stock Average climbed 3.8 percent, its steepest gain since May 7 and the biggest advance in the Asia- Pacific region today. Mitsubishi Motors Corp. soared 14 percent on speculation PSA Peugeot Citroen may buy a stake in the carmaker.

Kospi, Hang Seng

South Korea’s Kospi Index climbed 1.5 percent and Hong Kong’s Hang Seng Index rose 1.3 percent. In China, the Shanghai Composite Index lost 0.2 percent. Futures on the U.S. Standard & Poor’s 500 Index added 0.6 percent. The gauge increased for a third day yesterday after the Fed’s comments.

Japan’s exporters rose after the yen weakened against all 16 of its major counterparts and traded as low as 87.92 against the dollar today, the lowest level since Nov. 25. The yen retreated for a third day against the euro. That boosts the value of overseas earnings at Japanese companies when converted into their home currency.

Sony, an electronics maker, rose 6 percent to 2,475 yen. Pioneer Corp., a maker of car-navigation systems and audio equipment, added 5.9 percent to 268 yen. Honda, which is Japan’s second-biggest carmaker and gets 42 percent of its revenue from North America, climbed 4.2 percent to 2,985 yen. Nissan Motor Co. rose 6.8 percent to 706 yen.

Lowest Return

The yen climbed to a 14-year high against the dollar last week and has averaged 93.89 this year, the strongest since currencies began trading freely in 1971. That has weighed on the Topix, making its 3.4 percent gain in 2009 the lowest return among the world’s 40 largest stock markets.

“The current level of the yen is creating a sense of security among investors,” said Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc., which manages the equivalent of $9.1 billion. “It’s a good opportunity for foreign companies to buy Japanese shares.”

Exporters also rose on optimism demand for their products will rise in the U.S. Eight regions “indicated some pickup in activity or improvement in conditions,” while the other four said conditions were little changed or mixed, the Fed said in its Beige Book survey. Policy makers last month repeated their pledge to keep interest rates low for an “extended period” to reduce unemployment.

Li & Fung rose 4.3 percent to HK$34.10, the third-biggest gain on the Hang Seng Index. James Hardie Industries NV, the top seller of home siding in the U.S., gained 3.2 percent to A$8.50 in Sydney.

‘Sense Of Security’

In Seoul, LG Electronics Inc. surged 8.2 percent to 112,500 won. The company, Asia’s second-largest handset maker, gets 32 percent its revenue from North America.

“The Beige Book confirmed that the economy is on an upward trend, spreading a sense of security,” said Mitsushige Akino, who oversees the equivalent of $450 million in assets in Tokyo at Ichiyoshi Investment Management Co. “People are expecting fundamentals to improve.”

Some mining companies surged as copper futures in Shanghai advanced for a fourth day to the highest level in 15 months on optimism demand for the metal used in construction and automobiles will improve as the global economy recovers.

BHP Billiton Ltd., the world’s largest mining company, rose 1.3 percent to A$42.47 in Sydney, the highest level since July 2, 2008. PanAust Ltd., owner of the second-largest copper mine in Laos, climbed 4.5 percent to 58.5 Australian cents. Jiangxi Copper Co. added 1 percent to HK$20.30 in Hong Kong.

Dubai Losses

The MSCI Asia Pacific Index’s gain this week has come amid optimism the region’s companies will be sheltered from losses related to Dubai World, which last week sought to restructure its debt. Dubai World is seeking to delay payments on less than half its liabilities, easing the potential damage to banks recovering from $1.7 trillion of losses and writedowns from the global crisis.

“The biggest contributor to the severe contraction last year was the fact that credit markets froze,” said Platypus’ Patkar. “It now looks as though things have returned to normal.”

The MSCI Asia Pacific Index’s rally from its March low has outpaced gains of 64 percent by the S&P 500 and 56 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the MSCI benchmark are valued at 22 times estimated earnings, compared with 18 times for the S&P and 16 times for the Stoxx 600.

Shipping Lines

Kawasaki Kisen advanced 6.5 percent to 263 yen. The Baltic Dry Index, a measure of rates for shipping commodities, rose 2.1 percent yesterday, its first gain in nine sessions. Nippon Yusen K.K., Japan’s largest shipping line, added 2 percent to 259 yen. Mitsui O.S.K. Lines Ltd. gained 4.2 percent to 497 yen.

Mitsubishi Motors jumped 14 percent to 135 yen after a trading halt was lifted, the steepest increase in the Nikkei 225. Paris-based Peugeot said it has begun talks with Mitsubishi on a “strategic partnership.” The Japanese automaker said an equity tie-up with Peugeot is one of several options it’s considering.

In Singapore, Parkway Holdings Ltd., Asia’s biggest hospital operator, added 5 percent to S$2.94 after Deutsche Bank AG raised its rating on the stock to “buy” from “hold,” citing a recovery in demand for health-care services.

Green Cross Corp., a developer of vaccines, rose 2.8 percent to 129,000 won in Seoul after Shinhan Investment Corp. upgraded the stock to “buy” from “hold.”

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