China Stocks Rise to Four-Month High, Led by China Cosco Gains

By Zhang Shidong and Chua Kong Ho

Feb. 9 (Bloomberg) -- China’s stocks climbed to a four- month high, led by China Cosco Holdings Co. after the Baltic Dry Index advanced for a 14th straight day. Beijing Capital Development Co. gained after home sales at China Vanke Co. rose.

China Cosco, the world’s largest operator of dry-bulk ships, rose the 10 percent limit as the Baltic Dry Index, a gauge of commodity shipping costs, advanced a 14th day, boosting prospects for rates generally. Beijing Capital, owned by the municipal government, added 5.8 percent after Vanke, the nation’s biggest developer, posted its first gain in home sales in eight months.

The benchmark Shanghai Composite Index rose 43.48, or 2 percent, to 2,224.71, the highest close since Sept. 26. The CSI 300 Index, which measures shares on both of China’s exchanges, advanced 2.7 percent to 2,296.67.

The rebound in shipping rates is “one of the indicators” that the economy is stabilizing, said Michelle Qi, a portfolio manager at Bank of Communications Schroder Fund Management, which oversees about $790 million. Property companies are cutting prices, increasing transaction volume and providing “more liquidity to fund other projects,” Qi said.

Jiangxi Copper Co. and Aluminum Corp. of China Ltd. both climbed by the maximum 10 percent daily cap after metals prices jumped.

The Shanghai Composite has gained 22 percent this year, making it the best-performing stock gauge in the world, after the government announced on Nov. 9 a 4 trillion yuan ($585 billion) spending plan to boost the world’s third-largest economy. The central bank has also cut the key lending rate five times since September to support industries and stem job losses.

Economic Growth

China’s economy grew 6.8 percent in the fourth quarter, the slowest pace in seven years. Corporate earnings for Chinese mainland-listed companies are expected to fall 17 percent this year, Thomas Deng, the Hong Kong-based head of China strategy at Goldman Sachs Group Inc., said in Shanghai today. That will limit the stock market rally, he said.

China Cosco surged by the 10 percent limit to 10.74 yuan, taking the stock to the highest since Oct. 9. Cosco Shipping Co. added 6.8 percent to 10.16 yuan. China Shipping Development Co., the nation’s biggest oil carrier, advanced 5.1 percent to 12.11 yuan.

The Baltic Dry Index rose 9.6 percent to 1,642 points on Feb. 6, according to the Baltic Exchange, on the expectation iron ore demand will rebound in China. That’s a 112 percent jump this year. The index collapsed in December to levels unseen in two decades as steel demand slumped and the world economy slowed.

China, Iron

Iron ore is the world’s most-shipped commodity. The steel industry accounts for almost half of all dry-bulk cargo, according to shipper Golden Ocean Ltd. Stockpiles in China, the biggest user of the material, have dropped 23 percent from a high in September.

Beijing Capital climbed 5.8 percent to 10.36 yuan. Vanke added 1 percent to 7.90 yuan. Sales gained 19 percent last month, the first advance in eight months, after the company cut prices to lure buyers, the company said in a statement today.

Poly Real Estate Group Co., China’s second-largest publicly traded developer, added 2.2 percent to 18.44 yuan. Gemdale Corp., a Chinese developer that partnered with ING Groep NV, rose 4.2 percent to 8.69 yuan.

Jiangxi Copper, China’s second-biggest producer of the metal, advanced the daily limit of 10 percent to 16.74 yuan. Yunnan Copper, the No. 3, surged 10 percent to 13.07 yuan. Aluminum Corp. of China, the nation’s biggest maker of the lightweight metal and also called Chalco, added 10 percent to 9.56 yuan.

Copper for April delivery on the Shanghai Futures Exchange rose the exchange-imposed 5 percent limit to 29,510 yuan a metric ton, the highest since Nov. 19, 2008. Shanghai aluminum gained as much as 3.3 percent to 12,220 yuan a ton, the highest since Jan. 12.

The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.

Beiqi Foton Motor Co. (600166 CH), China’s biggest commercial-vehicle maker, jumped 0.74 yuan, or the 10 percent limit, to 8.10 yuan. The stock was rated “outperform” in initial coverage, analyst Jiang Xueqing at Shenyin & Wanguo Securities Co. said in a report today. Beiqi Foton will continue to win orders for hybrid buses, she said.

China Petroleum & Chemical Corp. (600028 CH), Asia’s biggest oil refiner, also known as Sinopec, added 0.06 yuan, or 0.7 percent to 8.61. Sinopec aims to boost oil and gas output at its northwestern fields by as much as 67 percent in 2020, compared with 2015, to meet an expected increase in demand.

Zhejiang Leo Co. (002131 CH), a water pump manufacturer, surged 1.12 yuan, or 10 percent, to 12.33 on media reports China’s worst drought in five decades will boost sales.

To contact the reporters on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net; Chua Kong Ho in Shanghai at kchua6@bloomberg.net

Read more...

Japanese Stocks Fall on Nomura Share Plan, Asahi Glass Forecast

By Masaki Kondo

Feb. 9 (Bloomberg) -- Japanese stocks fell as Nomura Holdings Inc.’s plan to bolster capital sparked concern ownership will be diluted and Asahi Glass Co. forecast a loss this year.

Nomura, Japan’s No. 1 brokerage, plunged the most in at least 34 years after saying it may sell common stock. Rival Daiwa Securities Group Inc. lost 3.6 percent as Moody’s Investors Service said it may lower the company’s credit rating. Asahi Glass, Asia’s biggest maker of the material, sank 10 percent after predicting its first loss in seven years. Toyota Motor Corp. jumped 3.2 percent after Credit Suisse Group AG said the carmaker’s earnings will bottom out this quarter.

The Nikkei 225 Stock Average fell 107.59, or 1.3 percent, to close at 7,969.03 in Tokyo, reversing from an early 2.2 percent jump. The broader Topix index slid 11.94, or 1.5 percent, to 778.90, with almost five stocks falling for each that rose.

“Unlike preferred shares, selling common stock will have a direct dilution effect, and it’s very calamitous for existing shareholders,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees about $6.1 billion. Automakers “have been sold because of earnings concern, but these shares will eventually rebound. Investors seeking long- term returns don’t want to miss out on this chance to buy them.”

The value of stocks traded on the Tokyo bourse’s main board fell to the lowest level in a week and one-third lower than the 12-month average.

Financial companies globally have posted more than $1 trillion in credit losses and writedowns since the collapse of the U.S. mortgage market. The Nikkei fell by a record 42 percent last year and about two-thirds of the benchmark’s members trade at below their net worth, according to Bloomberg data.

Common Stock

Nomura may sell common stock valued at as much as 300 billion yen ($3.29 billion) from Feb. 19 to replenish capital, the company said on Feb. 6 after markets shut. Last month it posted a fourth-straight quarterly loss.

Nomura sank 14 percent to 490 yen, the sharpest plunge since at least September 1974, the limit of Bloomberg pricing data. Closest competitor Daiwa Securities Group Inc. lost 3.6 percent to 433 yen after Moody’s said it may lower the brokerage’s credit rating because of the “persistently negative operating environment.” A gauge of brokerages fell the most among the Topix’s 33 industry groups.

Asahi Glass plummeted 10 percent to 466 yen. The company said on Feb. 6 it expects a net loss of 42 billion yen this year as a full-scale recovery in the global economy isn’t likely. That would mark its first loss since the year ending March 2002.

Machine Orders

Toyota, the world’s biggest automaker, jumped 3.2 percent to 3,190 yen, making it the most actively traded stock by value in Tokyo, followed by Nomura. Its earnings will bottom out in the fourth quarter and will gradually improve thereafter, Koji Endo, a Tokyo-based analyst for Credit Suisse, wrote in a report dated on Feb. 6. He raised Toyota to “neutral” from “underperform.”

Fanuc Ltd., the No. 1 maker of industrial robots globally, jumped 4 percent to 6,220 yen after Nomura Securities Co. raised its rating on the stock to “buy.”Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, added 2.6 percent to 1,058 yen, and Hitachi Construction Machinery Co., the world’s top manufacturer of giant excavators, gained 3.3 percent to 1,111 yen.

Orders for Japanese machinery fell 1.7 percent in December from November, the Cabinet Office said today before markets opened. Economists had estimated an 8.6 percent tumble.

Nikkei futures expiring in March added 0.5 percent to 8,100 in Osaka and gained 0.3 percent to 8,095 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Read more...

Asian Stocks Fall on Share-Sale Concern; Nomura, Suncorp Slump

By Jonathan Burgos

Feb. 9 (Bloomberg) -- Asian stocks fell, led by banks and insurers, as share-sale plans fanned concern the credit crunch is causing funding difficulties at companies across the region.

Nomura Holdings Inc., Japan’s largest securities firm, lost 14 percent after saying it may sell shares to replenish capital. Suncorp-Metway Ltd., Australia’s third-largest general insurer, plunged 21 percent after it sold stock at a discount. CapitaLand Ltd., Southeast Asia’s largest property developer, was suspended from trading in Singapore as it said it will raise $1.2 billion through the sale of equity after fourth-quarter profit slumped.

“The worst is not over yet,” said John Koh, regional investment director at MEAG Hong Kong Ltd. which manages $1.1 billion. “We’ll see worsening earnings going forward.”

About five stocks declined for every three that advanced on the MSCI Asia Pacific Index, which dropped 0.4 percent to 83.13 as of 5:13 p.m. in Tokyo. The gauge has fallen 7.2 percent in 2009, extending last year’s record 43 percent tumble, as the world’s biggest economies sank into recession.

Japan’s Nikkei 225 Stock Average lost 1.3 percent to 7,969.03, while Hong Kong’s Hang Seng Index gained 0.8 percent. Australia’s S&P/ASX 200 Index advanced 1.1 percent. All markets gained except South Korea, New Zealand, Singapore and Indonesia.

Haseko Corp., which builds condominiums and offices, sank 15 percent in Tokyo after saying it may not recover money owed by a bankrupt developer. BHP Billiton Ltd., the world’s biggest mining company, climbed 3.4 percent as it said it may acquire mines and plants. Toyota Motor Corp., which widened its annual loss forecast, jumped 3.2 percent after Credit Suisse Group AG said its earnings will bottom out this quarter.

Government Action

Futures on the Standard & Poor’s 500 Index fell 1.4 percent. The gauge climbed 2.7 percent on Feb. 6 to the highest level since Jan. 28 after the U.S. jobless rate jumped to 7.6 percent last month, the highest since 1992, sparking speculation Congress will move quickly to pass an economic stimulus plan.

Governments around the world are stepping up efforts to ease the crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year. Asian nations from China to Singapore and India have pledged more than $685 billion on their own spending programs.

Advanced economies are already in “depression”, IMF Managing Director Dominique Strauss-Kahn said in Kuala Lumpur at the weekend.

A key procedural vote in the U.S. Senate on a $780 billion proposal is scheduled for later today, with a final vote tomorrow. The Senate measure must then be reconciled with an $819 billion plan the House approved last month.

Raising Capital

Stock declines in the past year have dragged the average valuation of companies on the MSCI Asia Pacific Index down by 15 percent to 13 times reported profit, as more signs emerged the global financial crisis was hurting corporate earnings.

Nomura tumbled 14 percent to 490 yen after saying it may sell stock valued at as much as 300 billion yen ($3.3 billion) from Feb. 19, the company said on Feb. 6 after markets shut. The brokerage posted a record loss of 343 billion yen in the three months to Dec. 31.

Suncorp plunged 21 percent to A$5.31. The company on Feb. 6 said it sold shares to institutions at a 33 percent discount to the stock’s last traded price. The stock also tumbled amid concern insurance claims will rise following wildfires in Australia that have so far killed at least 108 people and destroyed 750 homes.

Distressed Sellers

Haseko plunged 15 percent to 66 yen. The company is assessing its earnings forecast in light of the possible failure to recover funds from Japan General Estate Co. and its real estate unit. Japan General filed for bankruptcy protection last week.

Singapore’s CapitaLand, which reported an 88 percent slump in fourth-quarter profit, said it will raise S$1.84 billion ($1.2 billion) by selling equity to existing investors. The stock, suspended today, is down 24 percent this year.

In Sydney, BHP rose 3.4 percent to A$33.34. The company will seek assets from any distressed sellers and said some of Rio Tinto Group’s would fit well into its portfolio, Chief Executive Officer Marius Kloppers told the Australian Broadcasting Corp. yesterday.

Rio, which last week said it was in talks with Aluminum Corp. of China to raise cash by selling debt and stakes in some units, gained 5.7 percent to A$49.40. The company said today that director Jim Leng quit and will no longer become chairman as announced less than a month ago.

Machinery Orders

Japan’s Nikkei 225 gained as much as 2.2 percent today as a government report showed orders for Japanese machinery fell 1.7 percent in December from November. That’s less than the 8.6 percent tumble, economists in a Bloomberg survey had estimated.

Toyota, the world’s biggest automaker, jumped 3.2 percent to 3,190 yen, making it the most actively traded stock by value in Tokyo, followed by Nomura. Its earnings will bottom out in the fourth quarter and will gradually improve thereafter, Koji Endo, a Tokyo-based analyst for Credit Suisse, wrote in a report dated Feb. 6. He raised Toyota to “neutral” from “underperform.”

Nissan Motor Co., Japan’s third largest-automaker, fell 5.8 percent to 261 yen. The company said after markets closed it expects a net loss of 265 billion yen ($2.91 billion) for the year ending March 31, compared to its October estimate of 160 billion yen in net income.

Coca-Cola Amatil Ltd., Australia’s biggest soft-drink maker, slumped 11 percent to A$8.30 after Lion Nathan Ltd., the nation’s second-largest brewer, scrapped its A$7.3 billion (S4.9 billion) offer for the company.

To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Read more...

France Stocks Update: CAC 40 Falls 22.16 to 3,100.63

By Daniel Hauck

Feb. 9 (Bloomberg) -- France's benchmark stock index, the CAC 40, fell 0.71 percent at 9:05 a.m.

The index of 40 companies traded on the Paris Bourse fell 22.16 to 3,100.63. Among the stocks in the index, 7 rose and 33 fell.

Declines in the CAC 40 were led by Total Sa, Gdf Suez and Arcelormittal. About 2.82 million shares traded in the CAC 40.

Read more...

U.K. Stocks Update: FTSE 100 Falls 28.21 to 4,263.66

By Daniel Hauck

Feb. 9 (Bloomberg) -- The U.K.'s benchmark stock index, the FTSE 100, fell 0.66 percent at 8:05 a.m.

The index of 102 stocks traded on the London Stock Exchange fell 28.21 to 4,263.66. Among the stocks in the index, 27 rose, 70 fell and 5 were unchanged.

Declines in the FTSE 100 were led by Bg Group Plc (Bg/ Ln), Hsbc Holdings Plc (Hsba Ln) and Bp Plc (Bp/ Ln). About 25.66 million shares traded in the FTSE 100.

Read more...

Stocks in Europe, Asia, U.S. Futures Drop; Bank Shares Decline

By Sarah Jones

Feb. 9 (Bloomberg) -- Stocks in Europe and Asia fell and U.S. futures declined after Treasury Secretary Timothy Geithner delayed the announcement of the Obama administration’s financial recovery plan and Nissan Motor Co. forecast a full-year loss.

Deutsche Bank AG and UBS AG slid more than 1.8 percent after U.S. officials debated proposals aimed at addressing the toxic debt clogging banks’ balance sheets. Nomura Holdings Inc. dropped the most in more than 34 years as Japan’s biggest brokerage said it may sell common stock to replenish capital. Renault SA, which owns 44.3 percent of Nissan, sank 2.1 percent.

Europe’s Dow Jones Stoxx 600 Index slipped 0.6 percent at 8:05 a.m. in London, leaving it with a 2009 loss of 0.5 percent. The MSCI Asia-Pacific Index decreased 0.4 percent, while Standard & Poor’s 500 Index futures dropped 1.3 percent.

U.S. equities last week snapped four weeks of declines on speculation the deteriorating economy would force Congress to reach a compromise on President Barack Obama’s economic stimulus package of about $800 billion. Officials said yesterday the delay in Geithner’s announcement was to allow the administration to focus on getting Senate approval of Obama’s fiscal stimulus.

“For the sake of the market, it’s very important we get the Obama stimulus package” through, said Philippe Gijsels, a Brussels-based senior structured-product strategist at Fortis Global Markets. We can expect bank earnings “to be very bad, there is very little visibility. It’s been a very bad overall earnings season which is still not quite over.”

European Earnings

Profits at 74 companies in the Stoxx 600 that reported results in 2009 fell 54 percent, Bloomberg data show. Analysts tracked by Bloomberg estimate that profits will slip 1.6 percent in 2009 after tumbling 20 percent last year.

The Stoxx 600 climbed last week as results at companies from Vodafone Group Plc to Electrolux AB beat estimates and governments stepped up efforts to ease the financial crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year.

Deutsche Bank, Germany’s largest bank, slid 1.8 percent to 21.14 euros while UBS, Switzerland’s biggest bank, lost 2.7 percent to 12.63 francs as U.S. officials debate the issue of illiquid assets that spurred the freeze in credit markets.

Officials are still considering a so-called bad bank to buy them, perhaps in cooperation with private investors, such as hedge funds and private equity. Some aspects of the plan, to be announced by Geithner tomorrow, have been settled, including a new round of injections of taxpayer funds into banks.

Fortis, Nomura

Fortis dropped 9.8 percent to 1.31 euros after Ping An Insurance (Group) Co. said it will reject the state-organized breakup of what was once Belgium’s largest financial-services firm.

Nomura tumbled 14 percent to 490 yen after saying it may sell as much as 300 billion yen ($3.3 billion) of common stock to replenish capital. Chief Executive Officer Kenichi Watanabe has failed to reassure investors with plans to cut costs and raise capital after posting four straight quarterly losses as tumbling stock markets eroded revenue.

Barclays added 3.7 percent to 108.7 pence. The bank said earnings fell less than 1 percent last year after 8.1 billion pounds ($12 billion) of asset writedowns.

Net income declined to 4.38 billion pounds, or 57.5 pence a share, from 4.42 billion pounds, or 66.7 pence, in 2007. That beat the mean estimate of 3.8 billion pounds from 12 analysts surveyed by Bloomberg.

Barclays said it won’t recommend a final dividend for 2008. The company plans to restart dividend payments in the second half of 2009.

Renault, Nissan

Renault fell 2.1 percent to 16.28 euros. Nissan, Japan’s third-largest automaker, predicted a full-year net loss of 265 billion yen ($2.91 billion) as the global recession cripples vehicle demand and a stronger yen cuts the value of earnings overseas. The carmaker said it will cut 20,000 jobs.

Separately, Les Echos reported the French government will today announce a loan of 6 billion euros ($7.8 billion) to be shared equally between Renault and PSA Peugeot Citroen. The newspaper did not cite anyone.

Hammerson Plc climbed 9.6 percent to 435 pence. The U.K. property developer that co-owns London’s Brent Cross shopping center plans to raise about 584 million pounds by selling shares in a rights offer to avoid breaking bank agreements.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

Read more...

Declining Stocks Cut Short Sales as Fleckenstein Buys Microsoft

By Lynn Thomasson

Feb. 9 (Bloomberg) -- The biggest bears in U.S. stocks are losing their conviction after the steepest decline in the Standard & Poor’s 500 Index since the Great Depression.

The number of shares borrowed and sold short on the New York Stock Exchange fell 28 percent last month from the peak in July. Companies in the S&P 500 trade at the lowest multiples of earnings in 18 years. President Barack Obama is working with Congress on a spending and tax-cut plan of about $800 billion to revive the economy, and regulators are imposing stiffer oversight on speculators.

While Seabreeze Partners Management Inc.’s Douglas Kass and David Tice at Federated Investors Inc. say there’s still money to be made betting that food and computer makers will fall, even Marc Faber, who publishes the “Gloom, Boom & Doom Report,” abandoned his so-called short positions. Bill Fleckenstein, who warned of the housing bubble in 2005, closed his 13-year-old bear market fund and bought shares of Microsoft Corp.

“It’d be easier for me to find five stocks I think are going to go up than five stocks I think are going to go down,” said Fleckenstein, who is based in Seattle. “Being short right now just feels like the wrong strategy.”

Short sellers, who borrow stock and sell it on hopes of capturing a profit by replacing the shares after prices fall, had the most success among hedge funds last year, gaining 28 percent on average, according to Chicago-based Hedge Fund Research Inc. The S&P 500’s 38 percent decline last year was the biggest drop since 1937. Only 24 shares in the index rose.

Price, Profits

Short interest, the number of shares sold short, totaled 13.4 billion on Jan. 15, down from 18.6 billion in July, based on data compiled by New York-based NYSE Euronext.

U.S. stocks trade at an average 15.23 times earnings after falling as low as 15.20 in November, the cheapest since 1990, based on an analysis by Robert Shiller, the Yale University professor whose 2000 book “Irrational Exuberance” predicted the market’s collapse.

“I would be very cautious about being short this market right now,” said Dan Veru, who manages about $2.4 billion and can bet on gains and declines in equities as chief investment officer of Palisade Capital Management LLC in Fort Lee, New Jersey. “It’s very dicey.”

Kass still expects to profit from betting cash-strapped consumers will switch to generic products and drive down shares of Northfield, Illinois-based Kraft Foods Inc., New York-based Colgate-Palmolive Co. and Kellogg Co. in Battle Creek, Michigan.

Lowered Forecast

Kraft, the maker of Kool-Aid drink mixes and Jell-O desserts, fell 9.2 percent Feb. 4, the steepest drop since 2003, after saying earnings will be less than its earlier forecast. The median company in the S&P 500 index of food producers, tobacco growers and grocery stores trades for an average 13.1 times earnings, the highest level among 10 industries in the gauge.

So-called consumer staples companies, which posted the smallest drop in the S&P 500 last year, are down 5.8 percent in 2009, underperforming the benchmark index by 1.9 percentage points. Colgate dropped 4.2 percent this year, while Kellogg, the biggest cereal maker, slid 0.6 percent.

“You’ve got to be a little more creative,” said Kass, who oversaw $200 million as of October for Palm Beach, Florida-based hedge-fund firm Seabreeze. “These are companies that face long- term challenges to their business model. Investors are going to see that.”

Tice, the Dallas-based strategist for the $1.1 billion Federated Prudent Bear Fund, anticipates a 50 percent drop in the S&P 500 this year and says technology stocks and retailers will retreat. The fund, which increased 27 percent in 2008, beat 96 percent of its peers in the past five years, according to data compiled by Bloomberg.

Broken Streak

Intel Corp., the world’s largest chipmaker, may report a first-quarter loss, Chief Executive Officer Paul Otellini wrote in an internal memo last month. That would end a 21-year run of profits for the Santa Clara, California, company. Technology stocks are the third most costly in the S&P 500, with the median company trading at 12.4 times profit.

“There are a lot of people feeling as if technology earnings are going to be OK,” Tice said in a Feb. 5 Bloomberg Television interview. “We think they’re going to be coming down a lot.”

Profits for S&P 500 companies fell 39 percent in the fourth- quarter, the steepest decline since Bloomberg began tracking the data in 1998. The recession, forecast to last for another five months, will drag earnings down an average 30 percent this quarter and 25 percent the next, according to estimates from analysts and economists surveyed by Bloomberg.

Discount Mechanism

The S&P 500 began recovering an average five months before recessions ended in 1975, 1982, and 1991, data compiled by Bloomberg show.

Declines that erased almost $29 trillion from global equity markets last year convinced Fleckenstein to close his short fund in December after falling valuations made it “too dangerous” to bet on more losses. He said the fund had a “great” year in 2008 and declined to comment further on its performance. Fleckenstein plans to start a fund this year that both buys and bets against stocks.

Fleckenstein bought shares of Redmond, Washington-based Microsoft, which traded at 9 times earnings last month, the cheapest since at least 1987. At the height of the technology bubble in March 2000, the world’s largest software maker traded at 69.8 times profit.

Faber, who is purchasing Asian stocks with some of the $300 million he oversees, told Bloomberg Radio Feb. 6 that he bought back the shares he shorted because investors speculating on an economic rebound may push the S&P 500 up 19 percent by May to 1,037. The index closed at 868.6 on Feb. 6 and rose 5.2 percent for the week.

‘Totally Imploded’

“Short selling is down because prices are down and because some regulation came in that made it very difficult,” Faber said. “You could make a case that in the U.S. that some equities have come down a lot and are inexpensive. Resource-related shares have totally imploded.”

Metals and chemicals stocks in the S&P 500 dropped 47 percent in 2008, the second-worst performance behind financial companies, which plunged 57 percent. Both annual returns were the worst since Bloomberg began tracking the data in 1990.

Should the S&P 500 rally, losses for investors who wager on declines could be magnified by a short squeeze, a rally caused by investors closing out bearish bets. The U.S. stock benchmark gained 15 percent since reaching an 11-year low Nov. 20 on the prospect that record low interest rates and Obama’s spending plan will jumpstart economic growth.

Government Scrutiny

Short sellers face more scrutiny from governments in the U.K., Japan and Australia after the FTSE 100 Index, Topix and S&P/ASX 200 suffered their worst year on record with losses exceeding 31 percent.

Regulators are requiring speculators disclose more information about their bets, enabling rival funds to exploit them for their own profit. Britain’s financial regulator plans to require investors list short positions on more than 3,000 shares traded on U.K. exchanges, it said Feb. 6.

The U.S. government banned investors from shorting financial companies in September after executives complained bearish traders were spreading rumors to drive down prices. The rule, which affected more than 900 companies, expired Oct. 8.

Morgan Stanley Chief Executive Officer John Mack told employees in a September memo that management was acting to stop “irresponsible action in the market,” and said there was “no rational basis” for the depth of the share-price declines. The New York-based bank tumbled 44 percent that month, the most since Bloomberg started compiling the data in 1993.

“It’s a little more difficult now,” said Tice. “There are still lots of possibilities, but we have to be a little more judicious.”

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

Read more...

Banco do Brasil, Isagen, Telmex, UOL: Latin Equity Preview

By Paulo Winterstein and James Attwood

Feb. 9 (Bloomberg) -- The following companies may have unusual price changes today in Latin American trading. Stock symbols are in parentheses and share prices reflect the previous close.

The MSCI Latin America Index rose 5.8 percent to 2,285.60 on Feb. 6. In Brazil, preferred shares usually are the most- traded class of stock.

Brazil

Banco do Brasil SA (BBAS3 BS): Brazil’s central bank approved the purchase of Banco do Estado de Santa Catarina SA by Banco do Brasil, Latin America’s biggest state-controlled bank. Banco do Brasil rose 1.3 percent to 14.58 reais.

Universo Online SA (UOLL4 BS): Online advertising during the first 11 months of 2008 rose 46 percent from the previous year. UOL, as the Internet provider is known, has a 30 percent share of the online advertising market, Fator Corretora analyst Jacqueline Lison wrote. UOL rose 2.9 percent to 7.20 reais.

Colombia

Ecopetrol SA (ECOPETL CB): Colombia’s state-controlled oil company aims to double Petro-Tech Peruana SA’s crude output within three years, Ecopetrol Vice President Nelson Navarrete said in an interview. Ecopetrol and Korea National Oil Corp. bought the Peruvian company for $900 million. Ecopetrol rose 1.9 percent to 2,150 pesos.

Isagen SA (ISAGEN CB): The electricity company was reiterated “sell” at brokerage Interbolsa SA, which said in a Feb. 6 note that the stock trades at a “rich” premium to its global peers. Interbolsa assigned an end-2009 price forecast of 1,493 pesos, down from a 2008 estimate of 1,630 pesos. Isagen rose 1 percent to 1,935 pesos.

Mexico

Telefonos de Mexico SAB (TELMEXL MM): Mexico’s largest fixed-line provider is expected to report net income of 5.6 billion pesos ($390 million) when it announces earnings today, according to the mean estimate of two analysts surveyed by Bloomberg. Telmex rose 31 centavos to 12.64 pesos.

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.

Read more...

Boeing, Hartford, Motorola, Smithfield: U.S. Equity Preview

By Lu Wang

Feb. 9 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Amgen Inc. (AMGN US): The world’s largest biotechnology company gained European approval to sell Nplate, a treatment for a chronic bleeding disorder.

Bank of Nova Scotia (BNS US): Canada’s third-largest bank by assets may rise 20 percent in Toronto trading in the next two years because it has avoided major losses from the collapse of the U.S. mortgage market, Barron’s said, citing investors and analysts.

Boeing Co. (BA US): The second-largest U.S. defense contractor won a contract valued at as much as $2.95 billion to build 15 C-17 transport aircraft, the Defense Department said on its Web site.

Hartford Financial Services Group Inc. (HIG US): The insurer that lost $2.75 billion last year may be allowed by its state regulator to reduce reserves in an effort to bolster the company’s finances, according to a person familiar with the matter.

Motorola Inc. (MOT US): The co-chief executive officers of the second-biggest U.S. seller of mobile phones spent $2.75 million buying company stock last week, their first purchases since the price plunged 72 percent last year. Separately, Barron’s said Motorola may be better off exiting the mobile-phone business.

NetApp Inc. (NTAP US): The company’s shares may rise 25 percent or more as its cost-saving technology for network infrastructure attracts demand, Barron’s said, citing Paul Wick, a money manager at J&W Seligman & Co.

Smithfield Foods Inc. (SFD US): The world’s biggest pork processor agreed to pay higher interest rates and pledged a processing plant as collateral to amend its $1.3 billion revolving credit facility.

UnitedHealth Group Inc. (UNH US): The company’s shares may surge 73 percent or more in the next year as its business with Medicare and Medicaid patients receives a boost from President Barack Obama’s health-care policy, Barron’s said, citing analysts and investors.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net.

Read more...

Oil Is Little Changed Amid Doubts Over Impact of Stimulus Plans

By Gavin Evans

Feb. 9 (Bloomberg) -- Crude oil traded little changed in New York amid doubts a $780 billion stimulus plan in the U.S. will lead to a rapid recovery in global energy demand.

Senate and Congress lawmakers due to vote on the plan today and tomorrow are more than “90 percent” agreed on its contents, Lawrence Summers, director of the National Economic Council, said yesterday. Stimulus packages won’t drag the global economy out of recession unless banking systems are also fixed, International Monetary Fund Managing Director Dominique Strauss- Kahn said.

Oil “could get up to the higher end of its range” once the U.S. stimulus plan is approved, Ben Barber, a broker with Bell Commodities Ltd. in Melbourne, said in a Bloomberg Television interview. “I really don’t see it breaking out above $60 a barrel until the markets sort of see a small glimmer of hope that this recovery is in place.”

Crude oil for March delivery was at $40.15 a barrel, down 2 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:30 a.m. in Sydney.

The contract traded between $38.60 and $42.68 last week and fell 2.4 percent to $40.17 a barrel on Feb. 6. Prices slumped as much as 6.2 percent that day after a report showed unemployment in the U.S. reached its highest since at least 1992.

The prospect of further production cuts by the Organization of Petroleum Exporting Countries and strike action in Nigeria, the fifth-largest supplier of oil to the U.S., failed to push crude beyond its recent trading range.

“There’s a lot of different things playing it from both sides,” Bell’s Barber said. “You’ve got the OPEC cuts and the global slowdown that is putting a lot of pressure on it.”

Price Plunge

New York oil futures have fallen 10 percent this year and are down 73 percent from the record $147.27 reached July 11 as a global recession cuts demand for oil and other commodities.

Advanced economies are already in a “depression” and “a lot of downside risk” remains, the IMF’s Strauss-Kahn said in Kuala Lumpur on Feb. 7.

Brent crude oil for March settlement fell 15 cents, or 0.3 percent, to $46.06 a barrel on London’s ICE Futures Europe exchange today. It fell 0.5 percent to $46.21 on Feb. 6.

OPEC pumps about 40 percent of the world’s oil and has cut daily output by 4.2 million barrels since September in a bid to prevent a glut and stem sliding prices.

OPEC will likely reduce production again next month in a bid to restore prices to $70 a barrel, Agence France-Presse reported Iraqi Oil Minister Hussain al-Shahristani as saying on Feb. 7.

Oil industry managers in Nigeria, OPEC’s seventh-largest producer, are due to start an indefinite strike today to protest attacks and abductions targeting oil installations.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net

Read more...

BOC, HSBC, ICTSI, Posco, Rio, STX: Asia Ex-Japan Equity Preview

By Ian C. Sayson

Feb. 9 (Bloomberg) -- The following companies may have unusual price changes today in Asia trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

Advanced Semiconductor Manufacturing Corp. (3355 HK): The Chinese chipmaker said it’s reviewing the carrying value of its 8-inch fabrication facility and the new assessment will likely adversely affect its earnings for 2008. The stock fell 0.1 cent, or 1.1 percent, to 8.9 Hong Kong cents.

Amcor Ltd. (AMC AU): Australia’s biggest packaging company said it is in talks to acquire part of Rio Tinto Group’s (RIO AU) Alcan aluminum packaging unit as the mining company seeks to sell assets to pay down debt. Amcor fell 33 cents, or 6.6 percent, to A$4.69. Rio, which is struggling under $38.9 billion of debt after acquiring Alcan Inc. in 2007, dropped 65 cents, or 1.4 percent, to A$46.75.

BOC Hong Kong (Holdings) Ltd. (2388 HK): The biggest bank by assets in the city said Chief Financial Officer Raymond Lee will retire on June 1 and a replacement is being sought. BOC, which incurred investment losses that last year forced a $2.5 billion capital injection from its parent, gained 11 cents, or 1.4 percent, to HK$8.16.

Chen Hsong Holdings Ltd. (57 HK): The Chinese maker of plastic-injection molding machines said orders have fallen off because of the global economic crisis and that it has cut its workforce by 25 percent since the end of March to 2,700. The stock advanced 2 cents, or 1.4 percent, to HK$1.44.

China Airlines (2610 TT): The airline expects to break even in 2009 after losses in the previous two years, the Apple Daily reported, citing President Sun Huang-hsiang. China Airlines, Taiwan’s largest carrier, rose 8 cents, or 1.2 percent, to NT$6.63.

Coca-Cola Amatil Ltd. (CCL AU): Australia’s biggest soft- drink maker said Lion Nathan Ltd.’s (LNN AU) A$7.3 billion ($4.8 billion) takeover proposal has been rejected by the company’s biggest shareholder. Coca-Cola Amatil fell 14 cents, or 1.5 percent, to A$9.35. Lion Nathan gained 10 cents, or 1.2 percent, to A$8.18.

DMCI Holdings Inc. (DMC PM): The largest Philippine construction company said its venture, Maynilad Water Services Inc., which serves the west half of the nation’s capital, will raise its rates this month by an average of 2.81 pesos a cubic meter to cover for inflation. The stock rose 10 centavos, or 3.6 percent, to 2.90 pesos. Metro Pacific Investments Corp. (MPI PM), DMCI’s partner in the utility, added 5 centavos, or 1.9 percent, to 2.65 pesos.

HSBC Holdings Plc (5 HK): The bank plans to cut a further 1,000 jobs in Hong Kong this week as the company seeks to lower costs amid the global recession, Oriental Daily News reported, citing employees it didn’t identify. The job cuts, which follow the elimination of 550 positions in the city last year, will focus on HSBC’s mortgage and loan operations, the newspaper said. HSBC jumped HK$2.80, or 4.7 percent, to HK$62.10.

HTC Corp. (2498 TT): The world’s biggest maker of Microsoft Corp. Windows-based handsets said it expects sales this quarter to be around NT$33 billion ($981 million) and operating profit margins at around 15 percent. Sales will probably rise between 10 percent and 20 percent this year, its chief financial officer said. The stock gained NT$15, or 4.8 percent, to NT$330.

Industrial & Commercial Bank of China Ltd. (1398 HK): The company and Bank of China Ltd. (3988 HK) may take a stake in Taiwan’s Mega Financial Holding Co. (2886 TT), the South China Morning Post reported today, citing Lin Jui-yun, a spokeswoman at the Taiwanese lender. Industrial & Commercial Bank, China’s largest lender, rallied 16 cents, or 4.6 percent, to HK$3.65. Bank of China, the third-biggest, climbed 4 cents, or 1.9 percent, to HK$2.18. Mega Financial, Taiwan’s No. 3 publicly traded financial services company, jumped 56 cents, or 5.7 percent, to NT$10.35.

International Container Terminal Services Inc. (ICT PM): The largest Philippine port operator said in a statement to the stock exchange that it bought 3.89 million shares in the open market at 12 pesos each on Feb. 6. ICTSI, as the company is also called, gained 25 centavos, or 2.1 percent, to 12 pesos.

Kinergy Ltd. (KNRGY SP): The Singapore-based electronics manufacturer said it will report a loss for 2008 on a significant drop in demand for orders caused by an economic downturn. The stock fell 1 cent, or 7.7 percent, to 12 Singapore cents on Feb. 3.

Korea Gas Corp. (036460 KS): The company is seeking to raise wholesale gas prices to local customers by 4.1 percent this year to reflect higher import costs, Yonhap News reported, citing company data. Korea Gas climbed 600 won, or 1.2 percent, to 50,600 won.

MISC Bhd. (MISC MK): The Malaysian owner of the world’s largest fleet of liquefied natural gas tankers is in talks with Petroleos de Venezuela SA to form an LNG shipping company, the Edge newspaper reported, without saying how it obtained the information. MISC added 20 sen, or 2.4 percent, to 8.55 ringgit.

Nan Ya Plastics Corp. (1303 TT): The world’s largest processor of plastics for pipes and imitation leather said January sales fell 61 percent to NT$8.49 billion. The stock gained 70 cents, or 2.1 percent, to NT$34.

Philex Mining Corp. (PX PM): The nation’s largest metals producer said it completed the $55 million purchase of Anglo American Plc’s 50 percent stake in Boyongan, paving way for the development of the copper-gold project in Southern Philippines. The stock rose 5 centavos, or 1.1 percent, to 4.60 pesos.

Piramal Healthcare Ltd. (PIHC IN): The Mumbai-based maker of generic drugs said speculation that the company is up for sale is “totally unfounded.” The company made the statement after a person familiar with the situation told Bloomberg News that GlaxoSmithKline Plc, the world’s No. 2 drugmaker, is interested in buying Piramal. Mary Anne Rhyne, a Glaxo spokeswoman in the U.S., declined to comment. Piramal dropped 10.1 rupees, or 5 percent, to 193.1.

Platinum Australia Ltd. (PLA AU): The producer of the metal will achieve full output at the Smokey Hills mine in South Africa, a project costing $45 million, by the end of March, Managing Director John Lewis said. Platinum Australia, which holds 70 percent of the mine, climbed 1 Australian cent, or 1.8 percent, to 56 cents.

Posco (005490 KS): Asia’s biggest stainless steel maker said it cut prices of the product by 14 percent this month to help spur demand. The company also said that it has no plans to build a $1 billion processing plant in India, denying a report by the Hindu Business Line. The stock rose 19,000 won, or 5 percent, to 400,000 won.

Singapore Airlines Ltd. (SIA SP): The carrier’s cargo unit has grounded one aircraft and parked it in a desert in the U.S. as the airfreight market slows, the Straits Times reported. The unit may ground more aircraft if business continues to fall, the newspaper said, citing Singapore Air spokesman Stephen Forshaw. Singapore Airlines retreated 32 cents, or 2.9 percent, to S$10.74.

SK Energy Co. (096770 KS): South Korea’s biggest refiner may have its credit rating downgraded on continued weakness in the oil-processing industry, Moody’s Investors Service said. About $750 million of debt securities are affected, it said. The stock gained 2,600 won, or 3.2 percent, to 84,900 won.

Sphere Investments Ltd. (SPH AU): The developer of an iron ore mine in Mauritania is looking for a “strategic partner” to take a 51 percent stake in the project, Managing Director Alexander Burns said. Sphere Investments rallied 2.5 Australian cents, or 9.6 percent, to 28.5 cents.

STX Shipbuilding Co. (067250 KS): The owner of Europe’s largest shipyard said it got a revised order for five vessels, instead of four, boosting the value of the contract by 48 percent to 591 billion won. The stock rose 650 won, or 4.5 percent, to 15,000 won.

Suncorp-Metway Ltd. (SUN AU): Australia’s third-largest general insurer said it raised A$855 million ($563 million) from the sale of 190 million new shares at A$4.50 apiece to institutions to bolster capital. The stock fell 25.3 cents, or 3.7 percent, to A$6.692 on Feb. 4.

Winbond Electronics Corp. (2344 TT): Taiwan’s fifth-largest maker of memory chips said it may give up its last factory and abandon manufacturing semiconductors. Winbond would remain a designer of memory chips, Vice Chairman CC Chang said. The stock rose 20 cents, or 6.5 percent, to NT$3.3.

Wing Tai Holdings Ltd. (WINGT SP): The Singapore real estate developer said its second-quarter profit fell 52 percent to S$20.9 million ($13.9 million). The stock rose 3 cents, or 4.4 percent, to 71 Singapore cents.

For Related News and Information: On Asian stocks: TNI STK ASIA On Asian stock moves: TNI ASIA MOV Most read Asian stories: MNI ASIA

Read more...

Japanese Stocks Advance on Policy Expectations, Machine Orders

By Masaki Kondo

Feb. 9 (Bloomberg) -- Japanese stocks rose on speculation a surge in unemployment will push the U.S. government to expedite recovery plans, and after domestic machinery orders fell less than estimated.

Honda Motor Co., which gets more than half of its profit from North America, advanced 2.2 percent on optimism the U.S. Congress will soon pass an economic stimulus plan and as the yen weakened against the dollar. Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, surged 4.3 percent. Nomura Holdings Inc., Japan’s largest securities firm, plunged 5.8 percent after saying it may sell new shares to replenish capital.

The Nikkei 225 Stock Average climbed 101.45, or 1.3 percent, to 8,178.07 as of 9:02 a.m. in Tokyo. The broader Topix index rose 7.95, or 1 percent, to 798.79.

“Governments and central banks have implemented a number of measures that have started taking effect,” said Chisato Haganuma, a Tokyo-based strategist at Nomura Securities Co., said in an interview with Bloomberg Television. “The rising unemployment rate is negative, but it shows companies are making efforts to reduce costs.”

The Nikkei sank by a record 42 percent last year as the world’s biggest economies sank into recession, and the gauge lost another 9.8 percent in January, the sharpest monthly slump since October.

The U.S. jobless rate jumped to 7.6 percent last month from 7.2 percent in January, the Labor Department reported on Feb. 6. The Senate delayed a vote on a stimulus package after lawmakers failed to agree on how to cut the more than $900 billion measure. The House has already passed an $819 billion version of the plan.

Orders for Japanese machinery fell 1.7 percent in December from November, the Cabinet Office said today before markets opened. Economists had estimated an 8.6 percent tumble.

Weakening Yen

The yen weakened against the dollar to as much as 92.42 today from 90.91 at the close of Tokyo stock trading on Feb. 6. A weaker yen increases the value of overseas sales for Japanese companies.

Nomura may sell common stock valued at as much as 300 billion yen from Feb. 19, the company said on Feb. 6 after markets shut. Last month, Nomura posted a fourth-straight quarterly loss, prompting the brokerage to sell convertible bonds.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Read more...

Australia Stocks, Japan Futures Rise on Metals, Policy Optimism

By Masaki Kondo

Feb. 9 (Bloomberg) -- Australia shares and Japanese stock futures rose on expectations the highest unemployment rate in 17 years will push the U.S. government to expedite the recovery of the world’s biggest economy.

BHP Billiton Ltd. climbed 3.6 percent in Sydney after metal prices rose in London. U.S.-traded receipts of Canon Inc., which gets a third of its sales from the Americas, advanced 3.2 percent from the closing price in Tokyo on optimism Congress will soon pass an economic stimulus plan and as the yen weakened. Nomura Holdings Inc., Japan’s largest securities firm, lost 5.3 percent after saying it may sell new shares to replenish capital.

“Governments and central banks have implemented a number of measures that have started taking effect,” said Chisato Haganuma, a Tokyo-based strategist at Nomura Securities Co., said in an interview with Bloomberg Television. “The rising unemployment rate is negative, but it shows companies are making efforts to reduce costs.”

Australia’s S&P/ASX 200 Index rose 1.6 percent to 3,523.80 as of 10:08 a.m. in Sydney. New Zealand’s NZX 50 Index added 1.2 percent to 2,805.30 in Wellington. In New York, the Standard & Poor’s 500 Index climbed 2.7 percent on Feb. 6 to the highest level since Jan. 28.

Nikkei 225 Stock Average futures expiring in March closed at 8,340 in Chicago, 3.5 percent higher than 8,060 in Osaka and 3.3 percent up from 8,075 in Singapore. The Bank of New York Mellon Asia ADR Price Index, which tracks American depositary receipts of the region’s companies, gained 3.3 percent.

The MSCI Asia Pacific Index lost a record 43 percent last year as the world’s biggest economies sank into recession, and the gauge has fallen another 7 percent in 2009.

Metal Prices

A measure of six primary metals traded in London climbed 4.2 percent on Feb. 6, capping a 9.2 percent gain for the week, the biggest weekly advance since the period ended Jan. 2.

The U.S. jobless rate jumped to 7.6 percent last month from 7.2 percent in January, the Labor Department reported on Feb. 6. The Senate delayed a vote on a stimulus package after lawmakers failed to agree on how to cut the more than $900 billion measure. The House has already passed an $819 billion version of the plan.

The yen weakened against the dollar to as much as 92.06 from 90.91 at the close of stock trading in Tokyo on Feb. 6. A weaker Japanese currency increases the value of overseas sales for Japanese companies. Every 1 yen decline against the dollar boosts Toyota’s annual operating profit by 40 billion yen ($436 million).

Toyota Projection

On Feb. 6, Toyota, the world’s biggest automaker, tripled its operating loss forecast for this fiscal year ending March 31 as a stronger yen eats into profit and demand tumbles in the U.S. and Japan. Tatsuo Yoshida, an analyst for UBS AG, said Toyota’s loss will reach 550 billion yen for the year ending March 2010. Toyota’s stock receipts rose 3.3 percent in New York.

Nomura may sell common stocks valued at as much as 300 billion yen from Feb. 19, the company said on Feb. 6 after markets shut. The brokerage posted a record loss of 343 billion yen in the three months to Dec. 31.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

Read more...

Asian Currencies Climb This Week on Efforts to Revive Economies

By Kim Kyoungwha and Lilian Karunungan

Feb. 7 (Bloomberg) -- An Asian currency gauge rose for a second week as policy makers stepped up efforts to revive economies reeling from the global recession, raising speculation overseas investors are returning to emerging markets.

Malaysia is prepared to take “radical” steps to boost the economy, the government said on Feb. 5, while Indonesia a day earlier cut interest rates for a third straight month. Taiwan will offer tax breaks and subsidized loans to lure local investors back from China, which is increasing export tax rebates for textiles. U.S. President Barack Obama urged lawmakers on Feb. 5 to pass his economic stimulus plan or face “catastrophe.”

The Philippine peso capped the biggest weekly advance in a month. India’s rupee had a second week of gains and Malaysia’s ringgit traded at a one-week high as regional stocks rallied.

“It’s a reversal of risk aversion,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. The peso “is moving in line with regional currencies on hopes Obama’s plan is making its way with less impediments.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent for the week to 105.10. The peso climbed 0.5 percent yesterday to 47.202 per dollar, a weekly gain of 0.4 percent. India’s rupee advanced 0.3 percent this week to 48.7250 versus the U.S. currency.

Malaysia, U.S. Stimulus

A U.S. Treasury official this week said Secretary Timothy Geithner will make a speech on Feb. 9 and Obama will hold a news conference that will address the financial recovery plan.

The MSCI Asia Pacific Index of regional shares rose 1.2 percent. The gauge has fallen 6.9 percent in 2009, extending last year’s record 43 percent tumble, as the credit crisis dragged the world’s biggest economies into recession.

Malaysia’s second stimulus plan, to be announced soon, will be much bigger than November’s 7 billion ringgit ($1.9 billion) package, state news service Bernama reported late on Feb. 5, citing Finance Minister Najib Razak.

“You’ve seen a little bit of sentiment shift in the market,” said Magnus Prim, chief Asia strategist at Skandinaviska Enskilda Banken in Singapore. “We’re still bearish on the ringgit so we think the strength we’re seeing now will prove temporary. We think there would be more negative news coming out of the economic front.”

The ringgit rose 0.3 percent to 3.6017 per dollar, gaining 0.2 percent on the week.

U.S. Jobless

The U.S. dollar fell versus the yen on concern a government report would show the jobless rate rose to a 16-year high, which it did, rising to 7.6 percent. The currency declined to 90.89 yen from 91.23 yen late in New York on Feb. 5. Against the euro, it traded at $1.2786 from $1.2790.

Taiwan, China, Malaysia and the Philippines will all issue data on exports next week, with economists surveyed by Bloomberg News forecasting contractions in each nation. The Bank of Korea also meets on interest rates.

Taiwan’s dollar declined this week on speculation falling exports and the slowing economy will deter overseas investors.

Economists are expecting overseas sales from Taiwan slid 48 percent in January, following a 42 percent decline a month earlier, according to a Bloomberg survey before the trade report on Feb. 9.

Taiwan Dollar, Exports

The central bank may seek to weaken its currency to help exports, according to AU Optronics Corp., the world’s third- biggest producer of liquid-crystal displays.

The bank “may encourage the currency to go downwards against the U.S. dollar in order to keep the competitiveness of our exports compared to Korea,” Andy Yang, a finance director who will take over as AU Optronics’s chief financial officer next month, said yesterday in an interview from Hsinchu, Taiwan.

The island’s dollar fell 0.5 percent this week to NT$33.750 from NT$33.57 on Jan. 23, when local markets closed for the week-long Lunar New Year holiday, according to Taipei Forex Inc.

Korea’s government may have to cut its economic growth forecast of 3 percent for 2009 as the economy is deteriorating faster than expected, incoming Finance Minister Yoon Jeung Hyun said yesterday.

The Korean currency rose 0.1 percent to 1,383.80 per dollar, paring this week’s loss to 0.3 percent, as global funds bought more local shares than they sold for an eighth day, the longest run of net purchases since April 2007.

Won, Yuan

“The won should be more fundamentally stable going forward,” said Stewart Newnham, a strategist with Morgan Stanley in Hong Kong. “We are still encouraged that trade is generally heading in the right direction. Financial flows are normalizing rapidly.”

Yuan forwards due in a year rose 2.4 percent this week, the most since March 1999, as China said it wants to maintain a stable currency to limit the impact of the global financial crisis. The contracts indicated China’s currency will weaken 1.1 percent to 6.9110 a dollar in a year. The Chinese yuan was little changed at 6.8360 from a week ago.

Elsewhere, the Indonesian rupiah rose 0.3 percent to 11,720 today, paring this week’s decline to 2.4 percent. The Thai baht fell 0.2 percent on the week to 35 per dollar and Vietnam’s dong was little changed at 17,485.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

Read more...

Asian Stocks Rise Second Week Amid Government Policy Optimism

By Darren Boey

Feb. 7 (Bloomberg) -- Asian stocks rose for a second week as optimism that government measures worldwide will ease the financial crisis offset cuts in earnings forecasts at Mizuho Financial Group Inc. and Hitachi Ltd.

BHP Billiton Ltd. and Kawasaki Kisen Kaisha Ltd. led gains among mining and shipping companies after China cut some tariffs on raw material and component imports. Mitsubishi UFJ Financial Group Inc. led banks lower as rival Mizuho, Japan’s second- largest lender, cut its earnings target. Hitachi, which makes electrical equipment, slumped 6.5 percent after forecasting the biggest loss by an Asian electronics maker.

“Fiscal and monetary stimulus policies have helped improve sentiment,” said Binay Chandgothia, who oversees about $1.5 billion as chief investment officer at Principal Asset Management Co. in Hong Kong. “These measures will benefit the economy although there will be more earnings downgrades.”

The MSCI Asia Pacific Index rose 0.4 percent to 83.42 in the past five days, adding to the previous week’s 3.5 percent increase. The gauge is down 6.9 percent in 2009 amid mounting signs the global recession has hurt corporate profits.

Toyota Motor Corp., the world’s largest automaker, yesterday widened its loss prediction on slowing demand in the U.S. and in Japan. Mitsubishi UFJ cut its full-year profit forecast after the stock market closed yesterday.

The Nikkei 225 Stock Average added 1 percent last week, while Hong Kong’s Hang Seng index climbed 2.8 percent. China’s Shanghai Composite Index surged 9.6 percent.

Government Action

Stocks have fallen this year amid mounting signs the financial crisis, which has caused more than $1 trillion in credit-related losses, is hurting corporate earnings. With banks tightening lending, bankruptcies among Japan’s listed companies reached an annual postwar record last year, according to Tokyo Shoko Research Ltd.

Governments around the world are stepping up efforts to ease the crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year. A U.S. Treasury official said this week that Secretary Timothy Geithner will make a speech Feb. 9 and President Barack Obama will hold a news conference that will address a stimulus package.

Indonesia’s central bank this week lowered its benchmark interest rate for a third straight month. China’s government started investing a second allocation of a 4 trillion yuan ($580 billion) economic stimulus package, the official Xinhua News Agency reported.

China’s State Council, or Cabinet, also this week said that components and raw materials that “really needed to be imported” will be exempted from import duties.

Baltic Dry

BHP, which gets about 20 percent of its revenue in China, climbed 5.7 percent to A$32.23 on speculation sales to Asia’s second-largest economy will revive. China Mobile, the world’s No. 1 wireless-phone company by users, gained 7.7 percent in Hong Kong to HK$75.90.

Kawasaki Kisen Kaisha, Japan’s No. 3 shipping line, soared 20 percent in the week to 401 yen. Mitsui O.S.K. Lines Ltd., operator of Japan’s largest fleet of iron-ore ships, jumped 19 percent to 629 yen. STX Pan Ocean Co., South Korea’s biggest bulk carrier, surged 17 percent to 11,900 won.

The Baltic Dry Index of prices for shipping commodities soared 15 percent on Feb. 4, the most since at least 1985. The measure climbed in the week amid speculation iron-ore shipments to China will increase.

Mitsubishi UFJ slumped 5.9 percent to 480 yen. The company cut its full-year profit forecast by 77 percent on rising bad loans and soured stock holdings. Japanese banks and insurers accounted for 57 percent of the $31.1 billion of credit-related losses declared by Asian financial companies, data compiled by Bloomberg show.

Hitachi, Toyota

Mizuho lost 0.4 percent to 226 yen. The company turned to a 145.1 billion yen loss in the three months ended Dec. 31 from a 66 billion yen profit a year earlier.

Hitachi slumped 6.5 percent to 275 yen after forecasting a record 700 billion yen ($7.8 billion) loss in the year ending March 31 amid slumping demand.

Toyota, which also lost its top rating from Moody’s Investors Service in the week, ended the week 5.6 percent higher at 3,090 yen. The company said its operating loss in the year ending March may total 450 billion yen ($4.95 billion) compared with company’s previous estimate of a 150 billion yen shortfall.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

Read more...