BLBG: Asian Stocks Gain on Speculation Slump in Oil Will Cut Costs
By Chua Kong Ho and Shani Raja
Dec. 5 (Bloomberg) -- Asian stocks rose, led by electronics companies, on speculation a slump in oil prices below $44 a barrel will reduce companies’ costs and spur consumer spending.
Nintendo Co., maker of the Wii video-game console, and Korea Electric Power Corp. gained more than 3 percent as Merrill Lynch & Co. forecast oil prices will dive further. Cnooc Ltd., China’s largest offshore oil producer, lost 2.4 percent. BHP Billiton Ltd., the world’s largest mining company, sank 5.2 percent as metal prices declined. Felix Resources Ltd., an Australian coal producer, soared 35 percent on speculation it will be taken over.
“The lower oil price puts more money in the pockets of consumers and from a corporate point of view, it knocks quite a bit off the cost side,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which oversees $85 billion. “Miners and resources companies will lag the broader market until commodity prices turn.”
The MSCI Asia Pacific Index gained 0.3 percent to 79.67 as of 1:53 p.m. in Tokyo, paring its decline this week to 3.6 percent. Seven of the gauge’s 10 industry groups advanced.
Japan’s Nikkei 225 Stock Average gained 0.3 percent to 7,948.27. South Korea’s Kospi Index advanced 1.6 percent. Hynix Semiconductor Inc., the world’s second-biggest memory chipmaker, rose 4.7 percent after Edaily reported creditors are considering providing financial support.
The MSCI measure has retreated 49 percent this year as the collapse in the U.S. housing industry dragged the global economy into recession and caused almost $1 trillion in writedowns and credit losses at financial institutions worldwide. The decline has left the index valued at 11.6 times estimated profit, about a third lower than at the start of the year.
U.S. Unemployment
Futures on the Standard & Poor’s 500 Index were little changed percent. The measure slid 2.9 percent yesterday as a government report said the number of Americans receiving jobless benefits in the week ended Nov. 22 jumped to the most since December 1982. A separate report showed orders at U.S. factories in October sank the most since July 2000.
Economists surveyed by Bloomberg News expect a Labor Department report later today to show that U.S. unemployment rose to a 15-year high of 6.8 percent in November.
Nintendo added 3.5 percent to 31,150 yen. Sony Corp., the world’s second-biggest consumer electronics maker, gained 0.9 percent to 1,739 yen.
Westfield Group, the world’s largest shopping mall owner by market value, climbed 2.3 percent to A$13.44, its first gain in four days. Korea Electric, which said last month it will need to increase power prices to avoid a wider loss, advanced 6.4 percent to 26,550 won.
Oil Tumbles
Crude oil in New York fell 6.7 percent yesterday to $43.67 in New York, the lowest settlement price since January 2005. Oil has retreated 70 percent from a record $147.27 a barrel on July 11 and is headed for its biggest weekly drop since March 2003. Prices may slide below $25 a barrel next year if the global recession spills over into China, Francisco Blanch, a London- based analyst at Merrill Lynch, said yesterday.
The retreat in oil and commodity prices has eased inflationary pressures across Asia, allowing central banks to reduce borrowing costs to bolster their economies. New Zealand, Indonesia and Thailand cut interest rates this week.
“Higher oil prices have been the main cause of inflation, so their decline is positive,” said Naoteru Teraoka, who helps oversee $21 billion at Chuo Mitsui Asset Management Co. in Tokyo. “It gives central banks some breathing room.”
‘Under Pressure’
Copper futures fell for a fifth day in New York, losing 5.5 percent to the lowest close since May 2005, and slumped by the daily limit in Shanghai.
Cnooc lost 2.4 percent to HK$5.74 in Hong Kong. Woodside Petroleum Ltd., Australia’s No. 2 oil producer, slid 1.4 percent to A$30.67, while rival Santos Ltd. slumped 9.7 percent to A$12.05. BHP Billiton sank 5.2 percent to A$26.07.
“We’re in an environment where demand is coming off, and that’s putting commodities under pressure,” said Matt Riordan, who helps manage $3 billion at Paradise Investment Management in Sydney. “Things have been slowing down pretty sharply.”
Felix Resources surged 35 percent to A$7.34, after the company said there’s “ongoing interest” for a takeover, though talks remain incomplete. The Australian Financial Review earlier reported China’s Yanzhou Coal Mining Co. was in talks to acquire Felix Resources for more than A$3 billion ($1.9 billion).
Hynix gained 4.1 percent to 7,600 won, after online news provider Edaily reported today the company’s controlling shareholders are reviewing financial support for the chipmaker, citing South Korea’s Minister of Knowledge Economy Lee Youn Ho.
In Taiwan, Mediatek Inc. slumped 6.9 percent to NT$181.50, the lowest since April 7, 2005. The chip designer slashed its sales forecast to a quarter-on-quarter decline of as much as 33 percent, more than the previous estimate for a 16 percent drop.
Japan’s Chugai Pharmaceutical Co. dropped 9.2 percent to 1,455 yen, the most since Oct. 16, after U.S. regulators delayed an approval of the company’s rheumatoid arthritis drug Actemra for a second time.
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
