By Shani Raja
Dec. 14 (Bloomberg) -- Asianstocks rebounded from earlier losses after Dubai secured $10 billion of funding to repay its debt. Japan shares dropped as a measure of business confidence showed companies are scaling back investment plans.
Samsung C&T Corp., builder of the world’s tallest tower in Dubai, climbed 3.3 percent after Abu Dhabi agreed to provide the money for Dubai’s financial support fund. Standard Chartered Plc, which has made loans to the Middle East, climbed 3.9 percent in Hong Kong. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank by value, sank 2.9 percent after the country’s Tankan confidence survey was released.
The MSCI Asia Pacific Index added 0.5 percent to 120.32 at 4:30 p.m. in Tokyo. It dropped 0.6 percent earlier. The gauge fell by 0.4 percent last week as downgrades to Greece’s credit rating exacerbated credit-market concern sparked by Dubai World’s plan to reschedule payments on its liabilities.
“It’s a positive development if Dubai steps in and says look, we’ll honor these debts,” said Prasad Patkar, who helps manage $1.7 billion at Platypus Asset Management in Sydney. “It has the potential to help along the subdued investor risk appetite that was in place the last couple of weeks.”
Japan’s Topix Index declined 0.4 percent. The Tankan survey of confidence among the country’s largest manufacturers rose the least since the economy emerged from its worst postwar recession.
Qantas, Alumina
China’s Shanghai Composite Index gained 1.7 percent. Hong Kong’s Hang Seng Index added 1 percent, while South Korea’s Kospi Index gained 0.5 percent.
Australia’s S&P/ASX 200 Index rose 0.4 percent. Qantas Airways Ltd. surged 3.5 percent in Sydney on plans to raise its international airfares. Alumina Ltd. jumped 6.4 percent after JPMorgan Chase & Co. boosted the profit outlook for Alcoa Inc., the largest U.S. aluminum producer.
Futures on the Standard & Poor’s 500 Index climbed 0.8 percent, while the MSCI World Index added 0.2 percent. The U.S. futures contracts rebounded from an earlier 0.3 percent drop after Abu Dhabi’s financing for Dubai was announced. The money will help repay obligations including $4.1 billion needed for a Nakheel PJSC Islamic bond maturing today.
State-controlled Dubai World said Dec. 1 it is seeking to restructure $26 billion of debt, less than half the $59 billion of liabilities it had at the end of 2008.
Dubai World
Samsung C&T climbed 3.3 percent to 49,500 won. The stock slumped as much as 14 percent after the Dubai government said on Nov. 25 that Dubai World was seeking a “standstill” accord on its debt. Samsung C&T said on Nov. 27 it stopped work on a $350 million bridge in Dubai after Nakheel halted payments.
Standard Chartered gained 3.9 percent to HK$196.30. The bank has $18 billion of loans to the Middle East and South Asia, of which two-thirds relates to the United Arab Emirates, Finance Director Richard Meddings said on Dec. 9.
HSBC Holdings Plc, Europe’s largest bank, added 1.7 percent to HK$91.70. The London-based banks are among Dubai World’s six main creditors, a banker familiar with the talks last week.
“Markets are likely to take the news positively in the immediate term as concerns are lifted,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc, which oversees $222 billion worldwide as of September. “Dubai is a symptom of a problem over the past decade of excessively loose credit and liquidity. That requires a long time to work through.”
In Tokyo, Obayashi Corp. lost 1.6 percent to 301 yen, paring an earlier slump of 5.9 percent. General contractors and machinery makers were holding about $7.5 billion of bills owed by the Dubai government and its affiliated companies as of Oct. 31, Nikkei reported, citing the Japanese government.
Growth Optimism
Kajima Corp. rose 1.1 percent to 184 yen, after slumping 5.5 percent. Mitsubishi Heavy Industries Ltd. added 0.3 percent to 322 yen, having earlier lost 1.6 percent. Both companies were also named in the Nikkei report.
The Standard & Poor’s 500 Index added 0.4 percent on Dec. 11 as better-than-estimated retail sales and consumer confidence reports fueled economic growth hopes that have boosted the U.S. index by 64 percent since March 9. The MSCI Asia Pacific Index has climbed 69 percent in that time, while Europe’s Dow Jones Stoxx 600 Index advanced 55 percent.
Stocks in the MSCI benchmark are valued at an average 22 times estimated earnings, higher than 18 times for the S&P 500 and 15 times for the Stoxx 600.
A report last week showed China’s industrial production rose 19.2 percent in November from a year earlier, exceeding the 18 percent estimated by economists, while South Korea’s central bank said gross domestic product will grow next year at a faster pace than previously forecast.
Capital Spending
“There’s always a chance things could get derailed, but we’re seeing an improving environment that bodes well for markets next year,” said Paul Xiradis, who manages $10 billion at Ausbil Dexia Ltd. in Sydney. “There is inaction by a number of market participants at the end of a wild year who are happy just to wait and see what happens next year.”
Mitsubishi UFJ sank 2.9 percent to 442 yen. Shinsei Bank Ltd. lost 1 percent to 104 yen. Large Japanese enterprises plan to cut capital spending by 13.8 percent this fiscal year, the worst reading for a December survey, compared with the 10.8 percent decline the Tankan showed three months ago.
“Weak capital investment shows we can’t expect a robust recovery in the domestic economy in the coming months,” said Hiroshi Morikawa, a senior strategist in Tokyo at MU Investments Co., which manages about $14 billion. “Unless businesses invest, the recovery led by exports won’t spread to the domestic economy.”
Higher Fares
Japan’s gross domestic product grew an annualized 1.3 percent in the three months to September, slower than the 4.8 percent reported last month, government data on Dec. 9 showed.
Qantas, Australia’s biggest airline, surged 3.5 percent to A$2.67. The carrier said it will increase economy-class fares as much as 5 percent on flights to destinations including Japan, North America and Europe.
Japan Airlines Corp. rose 3.2 percent to 98 yen. The U.S. and Japan agreed on a draft “open skies” treaty that will allow airlines in the two countries to act more like a single company for pricing, scheduling and marketing global flights.
Alumina climbed 6.4 percent to A$1.665. Alcoa’s earnings will be $1.45 a share in 2010, compared with an earlier prediction of $1.15, JPMorgan analyst Michael Gambardella wrote in a report. He raised his 2010 Alcoa share price estimate to $25 from $22 in line with metal-price revisions by a JPMorgan strategist.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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