Asia Stocks Swing Between Gains and Losses; China Property Developers Fall

By Shani Raja - Oct 10, 2011 12:09 PM GMT+0700

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Oct. 10 (Bloomberg) -- Nick Maroutsos, a Sydney-based money manager and co-founder at Kapstream Capital, talks about the outlook for financial markets and the U.S. economy. Maroutsos speaks with Susan Li and John Dawson on Bloomberg Television's "First Up." (Source: Bloomberg)

Asian stocks swung between gains and losses as the heads of Europe’s two biggest economies pledged to support banks amid a debt crisis that threatens global growth. Shares of Chinese companies fell on speculation the country will maintain tighter monetary policy.

Samsung Electronics, the world’s second-biggest maker of mobile phones, rose 2.7 percent in Seoul. Rio Tinto Group, the No.2 mining company by sales, gained 1.1 percent in Sydney after commodity prices climbed. Industrial & Commercial Bank of China (1398) Ltd., the nation’s biggest bank, slid 2.8 percent in Hong Kong, while China Overseas Land & Investment slumped 5.2 percent on concern the nation’s housing market is weakening.

The MSCI Asia Pacific Excluding Japan Index gained 0.3 percent to 383.41 as of 12:58 p.m. in Hong Kong. The gauge earlier rose as much as 0.8 percent after German Chancellor Angela Merkel said European leaders would do “everything necessary” to ensure banks have adequate capital. It sank as much as 0.3 percent after Hong Kong’s Hang Seng Index opened.

“The Europeans have been talking a lot about doing everything they can to solve the debt crisis, but we still haven’t seen any detail,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd. “In China, housing- market weakness, together with expectations for further monetary tightening continues to stoke fear of a hard landing for the economy.”

Prudent Policy

Australia’s S&P/ASX 200 Index gained 0.7 percent and South Korea’s Kospi Index added 0.5 percent. Japanese markets are closed for a public holiday.

The Hang Seng Index (HSI) dropped 0.5 percent after the Beijing Morning Post reported that Chinese central bank adviser Zhou Qiren said the country should maintain a prudent monetary policy. The Shanghai Composite Index fell 0.2 percent as the country’s markets resumed trading after a week-long holiday.

Futures on the Standard & Poor’s 500 Index rose 1.2 percent today. In New York, the gauge fell 0.8 percent on Oct. 7 as concern that Europe’s debt crisis will worsen overshadowed faster-than-forecast growth in American employment.

Financial stocks had the biggest decline in the S&P 500 among 10 industries after Fitch Ratings downgraded Italy and Spain. The S&P 500 last week came within 1 percent of extending its decline from its April peak to 20 percent, the common definition of a bear market.

At the weekend, Germany’s Merkel joined French President Nicolas Sarkozy in trying to persuade investors they can stamp out the debt crisis roiling global markets. At a joint press conference in Berlin, Sarkozy set a deadline of the Nov. 3 Group of 20 summit to deliver a response that addresses the immediate debt crisis in Greece, and what he called the structural defects in the 17-nation euro area. No details were provided.

‘Light Optimism’

“There is some light optimism on the back of the statements from Sarkozy and Merkel that they will have a euro stability plan by month-end,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney.

Samsung rose 2.7 percent to 883,000 won in Seoul. Hanjin Heavy Industries & Construction Co., which gets 62 percent of its revenue overseas, surged 15 percent to 18,400 won. LG Display Co. jumped 6.7 percent to 21,400 won after Shinhan Investment Corp. said the world’s No. 2 maker of liquid-crystal displays would narrow its operating loss in the fourth quarter and return to profit in the second quarter of 2012.

Li & Fung Ltd., the world’s biggest supplier of clothes and toys to retailers, gained 2.9 percent to HK$13.38 in Hong Kong, while in Sydney, Billabong International Ltd., a global surfwear maker, advanced 0.8 percent to A$3.66.

Copper, Oil

Rio Tinto gained 1.1 percent to A$67.15. Australia’s biggest steelmakers also climbed, with BlueScope Ltd. advancing 3.4 percent to 84.75 Australian cents and OneSteel Ltd. rising 1.9 percent to A$1.34. Cnooc Ltd., China’s largest offshore oil explorer, added 2.5 percent to HK$13.16 in Hong Kong.

Copper rose for the third straight day in New York on Oct. 7. New York-traded oil futures gained 0.5 percent after Labor Department figures showed U.S. employers added more payrolls than forecast in September, easing concern the economy is slowing. The jobless rate held at 9.1 percent.

The London Metal Exchange Index of prices for six industrial metals, including copper and aluminum, added 1.4 percent. Today, copper futures rose as much as 2.2 percent and oil as much as 1.2 percent.

The MSCI Asia Pacific ex-Japan Index dropped 20 percent this year through Oct. 7, compared with an 8.1 percent loss for the S&P 500 and a 16 percent decline for the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 10.7 times estimated earnings on average, compared with 11.6 times for the S&P 500 and 9.8 times for the Stoxx 600.

Hong Kong Shares

Hong Kong shares declined today after Chinese central bank adviser Zhou Qiren said the country should stick to a prudent monetary policy because small companies will have a better development environment only if inflation is thoroughly curbed, according to the Beijing Morning Post report.

Separately, the official Xinhua News Agency reported yesterday that China’s home prices will gradually ease because of rising inventories and a drop in property-market transactions. The housing market slumped during the National Day holiday, typically a strong period for housing sales, Xinhua said.

ICBC slid 2.8 percent to HK$3.89 in Hong Kong. Aluminum Corp. of China Ltd., the nation’s No. 1 producer of the light metal, plunged 7.1 percent to HK$3.43.

Among property developers, China Overseas slipped 5.2 percent to HK$12.02. Agile Property Holdings Ltd., which develops land in Guangdong province, tumbled 12 percent to HK$5.30.

Fuel Prices Cut

Some energy companies slumped in Hong Kong after China cut fuel prices for the first time this year. PetroChina Co., the country’s largest oil producer and Asia’s biggest company by market value, dropped 2.7 percent to HK$9.06. China Petroleum & Chemical Corp., the refiner known as Sinopec, dropped 4.8 percent to HK$7.13.

Separately, China Petrochemical Corp., parent of Sinopec, agreed to buy Daylight Energy Ltd. for about C$2.2 billion ($2.1 billion) in cash to add oil and gas assets in Canada, the Calgary, Alberta-based company said yesterday in a statement.

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

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net