Asian Stocks Rise, Extend Biggest Weekly Gain Since March; Olympus Plunges

By Shani Raja - Oct 17, 2011 11:42 AM GMT+0700

Asian stocks rose, extending the biggest weekly gain since March on the region’s benchmark index, after Group of 20 finance chiefs meeting in Paris endorsed parts of a plan to contain Europe’s debt crisis.

BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, advanced 2.3 percent in Sydney. National Australia Bank Ltd., the nation’s biggest business lender, climbed 2.3 percent. Esprit Holdings Ltd. (330), a clothier that gets 83 percent of its revenue in Europe, surged 7.8 percent in Hong Kong. Sony Corp. rose 4.4 percent after profit at its Sony Ericsson Mobile Communications AB venture beat analyst estimates. Olympus Corp. tumbled 23 percent after at least six brokerages cut their ratings on the optical-equipment maker after the sacking of its.

The MSCI Asia Pacific Index advanced 1.6 percent to 118.68 as of 1:21 p.m. in Tokyo. More than five stocks rose for each that fell. The gauge climbed 3.4 percent last week after German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged to deliver a plan to recapitalize Europe’s banks and address Greece’s debt crisis.

“An important precondition for resolving the European credit crisis is unity of vision and commitment to find a solution,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “The comments over the weekend show some elements of both. A credible and well- executed solution is the next element, and we are yet to see this.”

Japan’s Nikkei 225 Stock Average climbed 1.4 percent and Australia’s S&P/ASX 200 Index gained 1.7 percent. South Korea’s Kospi Index increased 1.2 percent. Hong Kong’s Hang Seng Index advanced 1.5 percent while Shanghai’s Composite Index added 0.2 percent.

Futures on the Standard & Poor’s 500 Index added 0.6 percent today. The gauge rose 1.7 percent in New York on Oct. 14 after a report showed retail sales rose more than economists estimated. The S&P 500 had its biggest weekly gain since July 2009 amid rising confidence that European policy makers are moving toward taming the region’s sovereign-debt crisis.

Retail Sales

Retail sales in the U.S. rose more than forecast in September, easing concern that slumping confidence and scant hiring will derail the biggest part of the economy.

Separately, G-20 finance ministers and central bankers concluded weekend talks in Paris, endorsing parts of an emerging plan to avoid a Greek default, bolster banks and curb contagion. They set an Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered.

Hurdles to overcome for an accord include resistance from bankers to a deeper restructuring of Greek debt as well as disagreements between Europe’s capitals over just how to multiply the firepower of their bailout fund and recapitalize financial institutions.

‘Risk Appetite’

“We could see that G-20 countries would cooperate with European countries, which helped concern over the debt crisis recede,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Investors are recovering their risk appetite.”

Commodity and consumer stocks paced advances among the Asian benchmark’s 10 industry groups. BHP Billiton rallied 2.3 percent to A$37.70 in Sydney, while rival Rio Tinto Group added 2.9 percent to A$70.27. S-Oil Corp., South Korea’s third-largest crude refiner, surged 7.9 percent to 109,500 won in Seoul, and Korea Zinc Co., which also produces gold and silver, advanced 1.6 percent to 320,000 won.

Mitsubishi Corp., a Japanese commodities trading company, surged 3.5 percent to 1,614 yen. Cnooc Ltd. rose 3.2 percent to HK$13.70 in Hong Kong after the state-run Xinhua News Agency said the company finished cleaning up an oil spill in China’s Bohai Bay, prompting the government to lift its emergency response to earlier leakages.

Copper, Oil

New York-traded copper futures rose 3.1 percent on Oct. 14, while the London Metal Exchange Index of prices for six metals including copper and aluminum advanced 2.1 percent. Crude oil futures in New York gained 3.1 percent.

Esprit surged 7.8 percent to HK$12.50 in Hong Kong, leading Asia’s exporters higher. Sony rose 4.4 percent to 1,599 yen after Sony Ericsson Mobile Communications AB posted third- quarter sales and pretax profit that exceeded analysts’ estimates as sales climbed in Asia.

Nissan Motor Co., a carmaker that gets about 80 percent of its sales overseas, gained 1.8 percent to 726 yen. Rival Honda Motor Co. added 2.8 percent to 2,311 yen. James Hardie Industries SE (JHX), a building-materials supplier that gets more than 70 percent of its sales from the U.S, climbed 0.9 percent to A$5.64 in Sydney.

Asian financial shares also climbed. National Australia Bank gained 2.4 percent to A$24.86 and Commonwealth Bank of Australia, the nation’s largest by market value, climbed 1.9 percent to A$48.38 in Sydney. HSBC Holdings Plc (5), Europe’s biggest lender, rose 1.3 percent to HK$64.55 in Hong Kong, while in Tokyo, Nomura Holdings Inc., Japan’s largest brokerage, jumped 4.1 percent to 303 yen.

Mitsubishi UFJ Financial Group Inc. advanced 1.8 percent to 341 yen after its Mitsubishi UFJ Morgan Stanley Co. joint venture said it plans to quadruple job cuts in Japan after the number of staff who accepted early retirement offers exceeded the brokerage’s initial estimate.

Estimated Earnings

The MSCI Asia Pacific Index dropped 15 percent this year through Oct. 14, compared with a 2.6 percent loss by the S&P 500 and a 14 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.9 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10.2 times for the Stoxx 600.

Among stocks that fell today, Olympus plunged 23 percent to 1,566 yen in Tokyo. The Japanese imaging-equipment maker was set to fall by a record for the second straight day after brokerages cut their ratings after President Michael C. Woodford was dismissed.

Woodford commissioned an external auditor’s report, which said that Olympus should investigate payments made to advisers in connection with an acquisition, according to a copy of the report obtained by Bloomberg News.

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