BLBG: Asian Stocks Rise an 8th Day on Tax Cut, Spending Expectations
Asian stocks gained, pushing the benchmark index to an eighth-consecutive gain, the longest streak since 2004, on optimism tax cuts, government spending and lower interest rates will alleviate the global recession.
Nintendo Co., which gets 40 percent of its sales from the U.S., rose 5.2 percent after officials said U.S. President-elect Barack Obama may cut taxes by more than $300 billion and as the yen weakened. Mizuho Financial Group Inc. soared 13 percent after the Sankei newspaper said Japan’s government may buy nonperforming loans from banks. India’s Sensex Index advanced after the central bank cut interest rates for a fourth time since October. Rio Tinto Group jumped after commodities prices rallied.
The MSCI Asia Pacific Index rose 1.3 percent to 91.25 as of 2:09 p.m. in Tokyo, set for the highest since Nov. 5. The benchmark has risen 5.6 percent in its longest string of advances since August 2004. It posted a record 43 percent slide last year, the worst annual performance in its two-decade history.
This year “will be much, much better than 2008; at least it will be without the shocks,” Liu Yang, who oversees about $2 billion in China assets at Atlantis Investment Management Ltd. in Hong Kong, said in an interview with Bloomberg Television. “Where the government money flows you follow.”
Japan’s Nikkei 225 Stock Average rose 2.1 percent to close at 9,043.12 in a half-day session, the highest since Nov. 10 and the index’s best start to a new year since 2002. The nation’s markets had been closed since Dec. 30 for New Year’s holidays.
Stock markets throughout the region advanced. China’s benchmark CSI 300 Index snapped an eight-day losing streak after the government said it will support the steel and automobile industries.
Asia Outlook
The value of global equities fell by almost half last year as the collapse of the American housing market froze credit markets and triggered the first simultaneous recessions in the U.S., Europe and Japan since World War II.
U.S. stocks rose to a two-month high on Jan. 2, with the Standard & Poor’s 500 Index gaining 3.2 percent, after General Motors Corp. received its first cash infusion from the government to keep the automaker afloat and oil prices rallied. S&P futures retreated 0.4 percent today.
“Equities are set to rally on risk appetite returning,” Sean Darby, chief Asian equity strategist at Nomura Holdings Inc. wrote in the brokerage’s annual outlook released today. “We expect growth in 2009 to remain subdued and equities have already priced this in.”
Tax Cuts
Nintendo, maker of the Wii video-game machine, jumped 5.2 percent to 35,500 yen in Osaka trading. AU Optronics Corp., Taiwan’s biggest maker of liquid-crystal displays, added 6.9 percent to NT$26.4.
Obama is pushing for tax cuts that would amount to about 40 percent of a stimulus package he’s asking Congress to pass within the next several weeks, a transition official and a Democratic aide said. The measure may be worth as much as $775 billion, the Democratic aide says, meaning tax cuts may constitute more than $300 billion of the legislation.
Mizuho, Japan’s third-biggest bank by market value, rallied 13 percent to 292 yen. Sumitomo Mitsui Financial Group Inc., the second-biggest, soared 11 percent to 4,190 yen. Both shares were untraded in the final days of 2008 as they conducted stock splits in preparation for Japan’s move to a paperless stock system.
The Japanese government and central bank are considering buying corporate debt, stocks and derivatives from financial companies, the Sankei newspaper reported on Dec. 30. A lack of capital helped drive bankruptcies among listed Japanese companies to the highest since World War II last year, according to researcher Teikoku Databank Co.
The yen depreciated to as low as 92.35 today from 90.64 at the 11 a.m. close of stock trading in Tokyo on Dec. 30, boosting the value of repatriated overseas sales.
China Support
“Government policies should support the market as investors try to come to grips with the worsening economic fundamentals,” Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television. “The yen’s depreciation is a tailwind for Japanese equities.”
Chinese shares advanced after Premier Wen Jiabao said the government has finished drawing up policies to support the steel and automobile industries through the economic slowdown. Wen didn’t elaborate on the policies when he made the statement on state radio on Jan. 2.
Baoshan Iron & Steel Co., China’s biggest steelmaker, rose 4.7 percent to 4.86 yuan. Chongqing Iron & Steel Co. jumped 10 percent to 3.80 yuan.
India Rates
State Bank of India, the nation’s biggest, added 2.3 percent to 1,360.25 rupees in Mumbai, while ICICI Bank Ltd., the second largest, surged 4 percent to 490.05 rupees.
India’s central bank lowered interest rates late on Jan. 2 for the fourth time since October. The government also doubled the amount overseas investors can hold in local bonds and extended capital to the nation’s banks.
Rio Tinto Group, the world’s No. 3 mining company, jumped 8.1 percent to A$42.11 after prices for copper and zinc soared. Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, jumped 11 percent to A$1.55. Mitsui & Co., which generates more than half its profits from commodities dealing, gained 8.6 percent to 978 yen. Inpex Corp., Japan’s biggest oil explorer, added 3.3 percent to 721,000 yen.
Korea Banks
Copper and zinc futures jumped by the daily limit in Shanghai, tracking moves in London, on speculation index funds will buy more industrial metals this month. Nickel soared 13 percent on Jan. 2 while lead rose 9.2 percent.
Oil rose a third day, following a 23 percent last week, the most since August 1986. Israeli troops crossed into the Gaza Strip, escalating the 10-day old conflict and threatening stability in the Middle East, the largest oil-producing region.
“If oil can go up and hold those gains then you’ve got reason to be a little bit more positive,” Donald Williams, who helps oversee $800 million as chief investment officer at Sydney- based Platypus Asset Management in Sydney, said in an interview with Bloomberg TV.
South Korean financial shares rallied after the nation’s foreign-exchange reserves rose for the first time in nine months in December and as the won strengthened, boosting confidence banks will be able to service foreign debt.
Woori Finance Holdings Co., which controls South Korea’s second-biggest bank, surged 15 percent to 7,210 won. Hana Financial Group Inc., which controls the fourth-biggest bank, climbed 9.2 percent to 20,800 won.
“The stabilizing won as well as high hopes for the Bank of Korea’s additional support measures are also driving bank stocks higher,” said Park Seong Min, a fund manager at LS Asset Management Co. in Seoul, which oversees the equivalent of $724 million in assets.
Taiwan’s Hon Hai Precision Industry Co. rose by its daily limit of 6.9 percent to NT$68.60. Chairman Terry Gou told the Commercial Times on Jan. 1 that the world’s largest contract maker of electronics will be the exclusive seller of Apple Inc.’s products in China.
