By Shani Raja - Oct 11, 2011 11:36 AM GMT+0700
Asian stocks rose, sending a regional index toward its biggest four-day advance since March 2009, as Chinese lenders surged as a state-owned investment company bought bank shares and Japanese equities climbed after resuming trade from a holiday.
Bank of China Ltd. (3988) climbed 8.5 percent in Hong Kong after China’s state-run investment arm said it began buying shares of the four biggest national banks. Cnooc Ltd. (883), China’s No. 1 offshore oil explorer, added 6.2 percent as a pledge by Germany and France to support Europe’s banks spurred commodity prices. Rio Tinto Group, the world’s second-biggest mining company by sales, rose 1.4 percent in Sydney and Korea Zinc Co. surged 5.3 percent in Seoul. Sony Corp. (6758), Japan’s largest exporter of consumer electronics, jumped 5.7 percent in Tokyo.
The MSCI Asia Pacific Index gained 2.1 percent to 116.08 as of 12:44 p.m. in Tokyo as commodity prices also advanced after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize the Europe’s banks and address Greece’s debt crisis by Nov. 3. More than six stocks rose for each that fell on the gauge.
“There is hope that if a comprehensive European bank package is announced, the damage on the real economy will be less than currently expected,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That would be better news for global growth and commodity demand.”
Book Value
The MSCI Asia Pacific Index dropped 17 percent this year through yesterday, compared with a 5 percent loss for the S&P 500 and a 14 percent decline for the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.6 times estimated earnings on average, compared with 12 times for the S&P 500 and 10 times for the Stoxx 600.
Companies in the MSCI Asia Pacific Index trade at about 1.2 times book value, compared with 2 times for the S&P 500 and 1.4 times for the Stoxx 600.
Japan’s Nikkei 225 Stock Average advanced 2 percent today as the nation’s markets resumed trading following yesterday’s public holiday. Hong Kong’s Hang Seng Index surged 3.3 percent, while Australia’s S&P/ASX 200 Index gained 0.6 percent and South Korea’s Kospi Index climbed 2.1 percent.
Futures on the Standard & Poor’s 500 Index slid 0.3 percent today. In New York yesterday, the gauge rose 3.4 percent, its biggest rally since August, with all 10 industry groups advancing. The S&P 500 last week rebounded from the threshold of a bear market on optimism Europe will tame its debt crisis and after U.S. economic data improved.
The Stoxx Europe 600 Index completed its biggest four-day gain since 2008 yesterday.
China Buying Banks
Bank of China climbed 8.5 percent to HK$2.67 in Hong Kong after China’s state-run Central Huijin Investment Ltd. began buying shares in the nation’s four biggest banks following a drop in valuations to below levels reached during the global financial crisis.
Industrial and Commercial Bank of China Ltd. rose 7.7 percent to HK$4.35. China Construction Bank Corp. (939) rallied 7 percent to HK$5.17 and Agricultural Bank of China Ltd. (601288) jumped 16 percent to HK$4.07.
Commodity producers rallied after copper futures for December delivery climbed 2.9 percent on the Comex in New York yesterday, while crude oil for November delivery gained 2.9 percent. The London Metal Exchange Index of prices for six industrial metals, including copper and aluminum, added 1.7 percent for its third straight daily increase. Crude and copper both declined today.
Rio, Cnooc
Rio Tinto rose 1.4 percent to A$68.37. Mitsubishi Corp. (8058), which gets 43 percent of its revenue from commodities trading, gained 2.2 percent to 1,514 yen in Tokyo. Korea Zinc surged 5.3 percent to 299,000 won in Seoul and Cnooc added 6.2 percent to HK$14.02 in Hong Kong.
“Commodity prices and stocks fell sharply over the last few months on worries Europe would blow up, causing a collapse in global growth,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The pledges from Merkel and Sarkozy help provide confidence that this won’t happen.”
Sony jumped 5.7 percent to 1,495 yen in Tokyo. Daewoo Shipbuilding & Marine Engineering Co., a South Korean shipbuilder that gets 98 percent of its revenue overseas, advanced 6 percent to 25,500 won in Seoul.
Esprit Holdings Ltd. (330), a Hong Kong-listed global clothing retailer, advanced 12 percent to HK$10.98 after hedge fund Lone Pine Capital LLC increased its stake to become the company’s second-biggest shareholder.
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
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