Asian Stocks Rise as China Easing Outweighs Europe Debt

By Kana Nishizawa - May 14, 2012 9:02 AM GMT+0700

Asian stocks swung between gains and losses after China cut the amount of cash banks must set aside as reserves to boost economic growth, and as speculation heightened Greece may exit from the single European currency.

China Overseas Land and Investment Ltd., the mainland’s biggest developer by market value, rose 1.4 percent in Hong Kong. Nippon Sheet Glass Co. (6954), a glassmaker that counts Europe as its No. 1 market, slid 1 percent in Tokyo. NGK Insulators Ltd. jumped 11 percent after a report the company plans to resume sodium battery production. Celltrion Inc. (068270), a biopharmaceutical company, surged for a second day in Seoul, climbing 9.2 percent after saying it plans to issue bonus shares to shareholders.

China’s reserve ratio rate cut is “an efficient means of them pushing liquidity into the market,” Timothy Riddell, head of global markets research in Singapore at Australia & New Zealand Banking Group Ltd., said on Bloomberg television. “We will be looking for more cuts through the reserve ratio rate through the rest of this year.”

The MSCI Asia Pacific Index (MXAP) slid 0.3 percent to 118.28 as of 10:55 a.m. in Tokyo, after rising as much as 0.2 percent. About four stocks fell for every three that rose. The measure posted its worst week in five months last week, falling 4.4 percent, amid concern Greece will be forced out of the euro and that austerity plans needed to contain the Europe’s debt crisis will be derailed.

Japan’s Nikkei 225 Stock Average (NKY) increased 0.2 percent, while Australia’s S&P/ASX 200 Index gained 0.1 percent. South Korea’s Kospi Index (KOSPI) slid 0.7 percent. Hong Kong’s Hang Seng Index lost 0.4 percent, while China’s Shanghai Composite Index slid 0.4 percent.

Annual Gain

The Asian regional index rose 4.2 percent this year through May 11, compared with a 7.6 percent gain by the S&P 500 and a 3 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with a multiple of 12.9 for the S&P 500 and 10.5 times for the Stoxx 600.

The People’s Bank of China said May 12 that it is cutting the amount of cash that banks must set aside as reserves for the third time in six months, pumping money into the financial system to support lending after data showed a slowdown in economic growth is deepening. Reserve ratios will fall 50 basis points, effective May 18.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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