BLBG: Asian Stocks Advance on Earnings Optimism; BHP Rises on Oil
Asian stocks rose, paring the regional benchmark index’s worst annual decline on record, amid speculation governments will step up measures to shore up the global economy and bolster earnings growth.
Chi Mei Optoelectronics Corp., Taiwan’s second-biggest liquid-crystal display maker, surged 7 percent as the government pledged $6.1 billion to help key industries through the slowdown. BHP Billiton Ltd., Australia’s largest oil company, and Cnooc Ltd., China’s largest offshore oil producer, added more than 2 percent as crude oil rose for a second day. Stocks also advanced as the U.S. Treasury committed $6 billion to support General Motors Corp.’s financing arm.
“Investors are grabbing at straws,” said Don Gimbel, a Montana-based senior managing director who helps manage $2 billion of international equities at Carret & Co. “They see what they perceive to be good news and some institutions don’t want to be seen to have too much cash at the end of the year.”
The MSCI Asia Pacific Index rose 0.6 percent to 89.46 as of 3:27 p.m. in Tokyo, with about two stocks advancing for each that declined. The benchmark measure has lost 43 percent this year, the worst performance in its two-decade history, as the credit crisis tipped the U.S. and Japan, the world’s largest economies, into recessions.
Japan’s Nikkei 225 Stock Average added 1.3 percent in a shortened trading day that was also the last for 2008. The gauge slumped 42 percent in 2008, its biggest annual decline. Sony Corp. rose to a two-week high on a report that it cut the cost of making its PlayStation3 video-game console.
Taiwan’s Taiex Index jumped 3.9 percent, with all other markets rising except Singapore and China. South Korea’s Kospi Index added 0.6 percent, as SK Holdings Co. climbed on plans to upgrade a refinery in Ecuador. The Philippines is closed.
Financial Turmoil
In New York, the Standard & Poor’s 500 Index slid 0.4 percent yesterday, amid concern a merger between Dow Chemical Co. and Rohm & Haas Co. will fall through. S&P 500 futures gained 0.5 percent.
Global equities have lost $30 trillion in value this year as the collapse of the American housing market pulled the U.S., Europe and Japan into their first simultaneous recessions since World War II.
The MSCI Asia Pacific Index’s slump in 2008 reduced the average value of companies on the gauge to 13 times estimated profit, a fifth below the level at the start of this year.
The turmoil prompted governments worldwide to cut borrowing costs and announce spending packages to bolster global growth that the International Monetary Fund said on Nov. 6 will slow to 2.2 percent next year. The IMF has said that a growth rate of 3 percent or less is “equivalent to a global recession.”
Government Support
Chi Mei jumped 7 percent to NT$10.70. Fubon Financial Holding co. the island’s second-biggest financial services company, surged 7 percent to NT$23.75.
“The market has already priced in all the bad news, but we need to see more clear signs of improvement before making a move,” said Shirley Yang, who manages $181.5 million Taiwan Fund at HSBC Asset Management in Taipei.
Taiwan’s government plans to spend NT$200 billion ($6.1 billion) to help key industries through the global financial crisis, Premier Liu Chao-Shiuan said at a briefing in Taipei today. He didn’t say when the money will be spent.
Gauges of energy and raw-material producers are the MSCI Asia Pacific Index’s worst performers this year as the slowdown threatened commodities demand. Oil prices in New York plunged 59 percent this year, while copper slumped 57 percent.
Worst Performers
BHP climbed 2.6 percent to A$29.65 after crude oil in New York yesterday rose to $40.02 a barrel, taking a two-day advance to 13 percent. Prices have risen on concern Israeli air strikes on the Gaza Strip will disrupt supply from the Middle East, the world’s largest oil producing region.
Woodside Petroleum Ltd., Australia’s No. 2 oil producer rallied 3.3 percent to A$35.93. Cnooc jumped 7.8 percent to HK$7.44 in Hong Kong. Japan’s Mitsubishi Corp., a trading company that gets more than half its profit from commodities, rose 2.8 percent to 1,238 yen.
“Rising oil prices are good for the people pulling it out of the ground,” said Gary Anderson, who helps manage $3 billion of international equities in Kansas City for UMB Financial Corp. “But it impacts on the cost of doing things. Margins get squeezed and people draw back.”
Sony, the world’s second-largest consumer electronics maker, added 1.2 percent to 1,922 yen, the highest since Dec. 15. The company reduced the cost of making the PlayStation3 by 35 percent, according to researcher iSuppli Corp.
Aeon Co., Japan’s largest supermarket operator, added 0.8 percent to 892 yen after saying it will cut spending on stores.
SK Holding, the holding arm of South Korea’s third-largest industrial group, rose 2.6 to 96,400 won. PetroEcuador plans to sign an agreement with SK Holdings to upgrade the Ecuadorean company’s 100,000-barrel-a-day Esmeraldas refinery.
