BLBG: Europe, Asia Stocks Rise; MSCI World Trims Worst Annual Drop
Stocks in Europe and Asia climbed, trimming the MSCI World Index’s biggest annual drop on record, as higher metals prices and China’s pledge to promote economic growth lifted commodity producers. U.S. index futures gained.
BHP Billiton Ltd., the world’s largest mining company, gained 2.7 percent as gold headed for an eighth annual increase. Rio Tinto Group rose 1.5 percent after selling its stake in an aluminum smelter in China to a partner to help reduce debt. China Mobile Ltd., the world’s No. 1 cell-phone operator by users, gained 2.1 percent as Jim Rogers said he’s been buying Chinese shares.
The MSCI World increased for a fifth day, adding 0.2 percent at 11:08 a.m. in London. The index of 23 developed nations dropped 42 percent this year as credit-related losses at financial firms that topped $1 trillion pushed the U.S., Europe and Japan into the first simultaneous recessions since World War II. Standard & Poor’s 500 Index futures rose 0.6 percent.
“It’s been a difficult year,” Julien Quistrebert, who helps manage $5.6 billion at KBL Richelieu Gestion in Paris, said in a Bloomberg Television interview. “We’re seeing a small year-end rally, but there’s not a lot of volume.”
Markets in Germany, Switzerland, Italy and Spain are closed today, while exchanges in the U.K., France, Belgium, the Netherlands and Portugal will shut early. Japan, South Korea, Thailand, Indonesia and the Philippines were also closed in Asia, while Hong Kong, Australia and Singapore shut early.
China’s CSI 300 Index fell for an eighth straight day, capping the gauge’s first annual decline since it was introduced in April 2005. The index tracking yuan-denominated A shares lost 66 percent in 2008 as economic growth cooled and exports shrank.
BRIC Nations
Stock measures in the other three so-called BRIC nations -- Brazil, Russia and India -- all lost more than 41 percent this year as the global economic slowdown reduced demand for commodities and the worst financial crisis since the Great Depression prompted investors to shun riskier assets.
The MSCI Europe Index gained 1.1 percent today, with Vodafone Group Plc advancing 2.7 percent after Credit Suisse Group AG rated the mobile-phone company a “trading buy.”
The MSCI Asia Pacific excluding Japan Index added 0.7 percent. 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.
Ghana’s Rally
Only three of 89 major indexes tracked by Bloomberg posted gains in 2008, as equities lost $30 trillion in value. Ghana’s All-Share Index was the best performer, surging 60 percent. An offshore oil discovery and government spending on roads and other projects lifted stocks in the country sandwiched between Togo and Ivory Coast.
In Europe, all 19 industry groups in the Dow Jones Stoxx 600 Index slid at least 18 percent as the measure tumbled 46 percent this year for the worst annual decline on record. Gauges of banks and miners both retreated 65 percent.
BHP climbed 2.7 percent to 1,312 pence today, trimming its 2008 decline to 15 percent. Gold may continue to rise in 2009 on speculation geopolitical tensions and a weaker dollar will boost demand for the metal as a haven.
Rio Tinto, the world’s third-largest mining company, advanced 1.5 percent to 1,469 pence. Qingtongxia Aluminium Co. will buy Rio Tinto’s 50 percent stake in the venture, Jim Singer, a Brisbane, Australia-based spokesman for London-based Rio Tinto, said without revealing the sale price. Calls to Qingtongxia weren’t immediately answered.
‘Totally Unaffected’
China Mobile added 2.1 percent to HK$77.80. 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.”
Vodafone climbed 2.7 percent to 139.8 pence. Credit Suisse said the decline in the value of the U.K. pound leaves “guidance and consensus beatable” for the mobile-phone company.
Imperial Energy Plc added 3.5 percent to 1,247 pence. Shareholders owning more than 90 percent of the stock of the U.K.-based explorer backed a 1.4 billion-pound ($2 billion) bid from India’s Oil & Natural Gas Corp.
‘Sigh of Relief’
The MSCI World has rallied 19 percent since Nov. 20 as U.S. President-elect Barack Obama pledged to stimulate growth with the biggest infrastructure investment since the 1950s and the Federal Reserve cut interest rates to as low as zero percent to combat the worst financial crisis in seven decades.
“It’s the end of 2008 so we’re breathing a sigh of relief,” said Jerome Forneris, a fund manager at Banque Martin Maurel in Marseille, France, who helps oversee $10 billion. “We can expect a good start to 2009. The investiture of Obama and his economic plan will bring a breath of fresh air and a wave of hope to the market.”
This year’s slump left the MSCI World valued at 11.7 times the earnings of its 1,693 companies, data compiled by Bloomberg show. That compares with an average ratio of 26.5 this decade. Europe’s Stoxx 600 trades at 9.3 times profit, compared with an average ratio of 26 since 2002, Bloomberg data show.
While the global economic slowdown weighed on stocks in 2008, U.S. government bonds were on course for their best year since 1995 amid speculation the American recession will extend into the first half of 2009. The dollar was set to complete its biggest annual decline against the yen in more than two decades, while the euro was poised for the best year against the British pound since its 1999 debut.
