BLBG; Asian Stocks Rise as Borrowing Costs Drop; Mizuho, Westpac Gain
By Chua Kong Ho and Patrick Rial
Nov. 4 (Bloomberg) -- Asian stocks rose, led by financial companies, as lending costs tumbled the most in almost a decade in Japan and Australia's central bank cut interest rates.
Mizuho Financial Group Inc. jumped more than 6 percent as Japan's three-month interbank rate fell the most since December 1999 after the Bank of Japan slashed interest rates last week. Westpac Banking Corp. added 4.2 percent following the Reserve Bank's three-quarter percentage point rate cut. Panasonic Corp. climbed 5.4 percent on speculation it will buy Sanyo Electric Co.
The MSCI Asia Pacific Index gained 2.5 percent to 89.93 as of 2:03 p.m. in Tokyo. Seven of the 10 industry groups climbed, with financial stocks contributing the most to the gain. About five stocks gained for every three that declined.
``The stability of financial markets has been restored somewhat,'' said Hideyuki Ookoshi, who helps oversee about $365 million at Chiba-Gin Asset Management Co. in Tokyo. ``Investors are keeping a keen eye on government efforts to shore up banks' capital, which is the key to the recovery of global economies.''
Japan's Nikkei 225 Stock Average gained 4.6 percent to 8,974.04, rebounding from its worst monthly slump on record. Japan's markets were shut yesterday for a holiday, when the MSCI Asia Pacific excluding Japan Index advanced 5.2 percent. Most markets elsewhere in Asia declined.
Tokyo Electric
Tokyo Electric Power Co., Asia's biggest utility, climbed 4.5 percent after forecasting a narrower loss, while Tokyo Gas Co. added 5.7 percent after predicting it will swing back into a profit. Among stocks that fell, Nissan Motor Co. dropped 9.5 percent. Japan's third-largest automaker cut its profit forecast 53 percent and scrapped its dividend plans.
Capping the region's advance, Cnooc Ltd., China's largest offshore oil producer, fell 5.5 percent as the price of crude declined for a second day. Singapore Telecommunications Ltd. slumped 7.6 percent after saying second-quarter profit will be hurt by currency movements.
Futures on the Standard & Poor's 500 Index declined 0.2 percent. U.S. stocks declined, with the S&P 500 dropping 0.3 percent, on the worst contraction in manufacturing since 1982 and forecasts that the sagging economy will reduce profits.
Mizuho, Tibor
Mizuho, Japan's second-largest bank by revenue, gained 6.8 percent to 247,800 yen. Mitsubishi UFJ Financial Group Inc., Japan's largest bank, added 6.4 percent to 636 yen. The Tokyo interbank offered rate, or Tibor, fell 9.8 basis points to 0.791 percent around noon, according to the Japanese Bankers Association.
Shinhan Financial, which controls South Korea's third- biggest bank, gained 6.8 percent to 35,400 won.
Westpac, Australia's second-biggest bank by market value, jumped 4.2 percent to A$22.36. National Australia Bank Ltd. added 2.2 percent to A$25.64.
Australian central bank Governor Glenn Stevens lowered the overnight cash rate target to 5.25 percent from 6 percent in Sydney today, adding to last month's 1 percentage point reduction. Fifteen of 16 economists surveyed by Bloomberg News forecast a half-point cut and one tipped a quarter-point drop.
``Markets turned around after a deeper-than-expected rate cut in Australia, emphasizing once again the determination of governments globally to bring down the cost of capital,'' said Howard Wang, who oversees $10 billion at JF Asset Management in Hong Kong.
iTraxx
The Markit iTraxx Australia index of credit-default swaps declined 10 basis points to trade at 235 as of 2:40 p.m. in Sydney, Citigroup Inc. data show.
Borrowing costs fell last week in Asia and Europe after central banks slashed rates and governments pledged as much as $3 trillion of emergency funds to tackle a collapse in trust among banks. Financing dried up after Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15, shattering lenders' confidence they would be repaid.
The London interbank offered rate, or Libor, that banks charge one another for three-month loans in dollars slid 17 basis points yesterday to 2.86 percent, a 16th day of declines, according to the British Bankers' Association.
Panasonic gained 5.4 percent to 1,593 yen on its plan to buy control of Sanyo Electric. The Osaka-based electronics manufacturer will make a formal acquisition proposal soon to Goldman Sachs Group Inc., Sumitomo Mitsui Banking Corp. and Daiwa Securities SMBC Co., a company official familiar with the negotiations said Nov. 1. The three banks hold preferred shares equal to 70 percent of Sanyo.
Tokyo Electric
Tokyo Electric gained 4.5 percent to 2,895 yen. The power producer on Oct. 31 estimated a net loss of 220 billion yen ($2.2 billion) for the current fiscal year, compared with a 280 billion yen loss forecast in July. Tokyo Gas, Japan's largest natural gas distributor, advanced 6.4 percent to 447 yen, after predicting a full-year profit, reversing an earlier loss forecast.
NTT climbed 3.7 percent to 160,700 yen, after reporting second-quarter profit rose 40 percent to 173.1 billion yen.
Dividend yields on the Nikkei's constituents reached 2.52 percent on Oct. 31, higher than the 1.48 percent yields on Japanese government 10-year bonds. The stock yields exceeded 2 percent on Oct. 3 for the first time since at least July 1989.
Nissan Motor, which cut its profit forecast by 52 percent, dropped 9.5 percent to 446 yen. The fixed payments Nissan Chief Executive Officer Carlos Ghosn promised to shareholders for the next three years will be reviewed, the carmaker said on Oct. 31.
Singapore Telecom, Southeast Asia's largest telephone company, which gets more than half its profit from its overseas unit, fell 7.6 percent to S$2.32. The phone company said second- quarter earnings will be hurt by currency movements, without providing specific figures.
Hynix Semiconductor Inc., the world's second-largest computer-memory maker, tumbled 7.7 percent to 10,150 won in Seoul after Moody's Investors Service cut its debt rating one level to Ba3, citing the company's weaker credit profile and earnings. Goldman, Sachs & Co. cut its price estimate by 29 percent.
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net
