BLBG: Asian Stocks Pare Record Annual Decline as Mining Shares Rally
Asian stocks advanced, narrowing the regional benchmark index’s biggest annual drop on record, as metals prices rose and China pledged to promote economic growth.
BHP Billiton Ltd., the world’s largest mining company, gained 2.7 percent in Sydney, as nickel climbed the most in two months. China Mobile Ltd., the world’s No. 1 cell-phone operator by users, climbed 2.1 percent in Hong Kong as investor Jim Rogers said he’s been buying Chinese shares in the city. PCCW Ltd., Hong Kong’s biggest phone company, surged 7.3 percent after a group led by Chairman Richard Li raised its buyout offer.
“There’s a bit of cautious optimism the new year might bring something better,” said Shane Oliver, head of investment strategy at AMP Capital Investors, which holds $61 billion in Sydney. “Mining stocks were pushed down this year as investors realized the world was going to be dragged into some sort of recession. Growth should pick up through the second half of 2009.”
Almost two stocks gained for each one that fell on the MSCI Asia Pacific excluding Japan Index, which climbed 0.9 percent to 247.36 as of 2:07 p.m. in Hong Kong. The gauge slumped 53 percent this year, the most in its two-decade history, as the global financial crisis dragged the world’s largest economies into recession.
Japan, South Korea, Thailand, Indonesia and the Philippines were closed today, while Hong Kong, Australia and Singapore shut early. Hong Kong’s Hang Seng Index climbed 1.1 percent to 14,387.48, cutting its 2008 drop to 48 percent. Australia’s S&P/ASX 200 Index rose 1.9 percent, paring the year’s loss to a record 41 percent.
Cosco Corp. Singapore Ltd., the shipbuilding unit of China’s biggest shipping company, plunged 7.8 percent after saying full- year profit may fall. China Eastern Airlines Corp. slumped 6 percent in Shanghai on losses from fuel hedging.
Losses, Writedowns
The MSCI Asia Pacific Index, which includes Japan, slid 43 percent for a record annual decline as the threat of lower commodities demand caused energy and materials indexes on the broader gauge to lose more than half their value. A measure of utilities had the best return, with a 4.8 percent drop.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent. The gauge added 2.4 percent yesterday as the government moved to shore up General Motors Corp.’s finance arm. The S&P 500 is poised for its worst year since 1931.
Only three of 89 major equity indexes tracked by Bloomberg posted gains in 2008. Global equities have lost $30 trillion in value this year as the collapse of the American housing market caused losses and writedowns at financial institutions worldwide to swell to more than $1 trillion.
‘More Bad News’
“We’re expecting to see more bad news about the global economy in 2009,” said Grace Tam, Hong Kong-based vice president of investment services at JPMorgan Asset Management Ltd., which manages about $1.1 trillion. “With the recent rally we’re raising cash because we expect the market to go down again.”
The MSCI Asia Pacific Index’s slump in 2008 reduced the average value of companies on the gauge to 13.3 times estimated profit, a fifth below the level at the start of this year. The price-earnings ratio for the MSCI World Index fell 29 percent for the year to 11 times.
BHP increased 2.7 percent to A$30.44. Minara Resources Ltd., the Australian nickel producer controlled by Glencore International AG, jumped 3.6 percent to 28.5 cents. Nickel surged 10 percent on the London Metal Exchange, the most since Oct. 29. Zinc rose 1.2 percent and copper 0.3 percent.
Rio Tinto Group, the world’s third-biggest mining company, climbed 2.6 percent to A$38. Rio sold its stake in an aluminum smelter venture in China to partner Qingtongxia Aluminium Co. to help reduce debt.
Jim Rogers
Atlas Iron Ltd. soared 10 percent to 85.5 cents after saying it discovered more iron ore deposits at its wholly owned Abydos project in Western Australia.
China Mobile added 2.1 percent to HK$77.80. PetroChina Co., China’s largest oil producer, rose 1.5 percent to HK$6.79. China Construction Bank Corp. gained 1.9 percent to HK$4.25.
The People’s Bank of China will “safeguard financial stability and enhance product innovation and the development of financial markets” to promote stable and relatively fast economic growth, Governor Zhou Xiaochuan said in a speech posted on the central bank’s Web site today.
China has cut interest rates five times in three months in support of a 4 trillion yuan ($587 billion) spending package intended to revive growth in the world’s fourth-biggest economy.
Growth is slowing but “some parts of the Chinese economy will be totally unaffected by what happens in the West,” Rogers, chairman of Rogers Holdings, said in an interview today in Hong Kong. “I started buying in October again. I never sold any Chinese shares.”
Hedging Losses
He first bought Chinese shares in 1988 and is now favoring equities traded in Hong Kong and Singapore that are cheaper than yuan-denominated stocks in Shanghai.
PCCW jumped 7.3 percent to HK$3.70. The group led by Chairman Li raised its bid for the shares they don’t already own by 7.1 percent to HK$4.50, from an earlier offer of HK$4.20.
Cosco Corp. Singapore dropped 7.8 percent to 95 Singapore cents, ending the year as the worst performer on the 30-member Straits Times Index. China Eastern Airlines, the nation’s third- largest carrier by fleet size, declined 6 percent to 4.22 yuan after incurring a $420,000 loss from the settlement of aviation fuel hedging contracts in November.
China Railway Construction Corp., the builder of more than half of the nation’s rail links since 1949, climbed 2.6 percent to 10.18 yuan after winning a contract to build a railway linking the southwest city of Chongqing to Lichuan in central Hubei province.
