BLBG: Asian Stocks Pare Weekly Loss on Yen Drop, China Stimulus
Asian stocks rose, paring the benchmark index’s steepest weekly loss in two months, as the weaker yen boosted Japan’s electronics and auto producers and speculation grew China will pass another stimulus package.
Seiko Epson Corp., the world’s No. 3 maker of inkjet printers, soared 8.7 percent. Shenyang Machine Tool Co., a Chinese maker of tools for shaping and drilling metal, rose 4.9 percent after Shanghai Securities News said China may extend aid to the nation’s machinery companies. Hynix Semiconductor Inc., a chipmaker that plummeted 74 percent last year, jumped 4.9 percent after market leader Intel Corp. said profitability may improve later this year as customers rebuild inventories.
The MSCI Asia Pacific Index gained 1.4 percent to 84.19 as of 2:01 p.m. in Tokyo. The gauge, which fell by the most last year in its two-decade history as the U.S. housing crisis sparked a global recession, is set for a 6.3 percent drop this week, the most since the period ended Nov. 21.
“Asia has borne the brunt of the sell-off, and it’s quite ironic, given that the U.S. is the epicenter of the problems we’re facing,” said Chu Toh Chieh, who helps oversee the equivalent of $17 billion at Singapore-based Lion Global Investors. “Funds have pulled out of the region, and the big drop in Asian markets means that we see opportunities.”
Japan’s Nikkei 225 Stock Average added 2.1 percent to 8,188.70. China’s CSI 300 Index advanced 2.4 percent, leading gains among the region’s markets. MSCI’s Asian benchmark extended gains after the U.S. government agreed to invest $20 billion more in Bank of America Corp. to prop up the lender.
Weaker Yen
U.S. stocks rebounded from intraday declines yesterday, with the Standard & Poor’s 500 Index finishing the day 0.1 percent higher after sliding as much as 3 percent. S&P futures climbed 0.7 percent today after the U.S. Senate voted to release the second half of a bank rescue fund.
Seiko Epson, which generates two-thirds of its revenue abroad, rallied 8.7 percent to 1,330 yen. Honda Motor Co., Japan’s second-largest automaker, rose 7.4 percent to 1,999 yen. Citizen Holdings Co., Japan’s second-largest watchmaker, surged 8.3 percent to 339 yen.
The yen weakened to as low as 90.44 against the dollar today from 88.97 at the 3 p.m. close of stock trading in Tokyo yesterday. A weaker yen boosts the value of overseas sales for Japanese companies.
Shenyang, China’s No. 2 listed industrial machinery maker, rose 4.9 percent to 5.53 yuan. Sany Heavy Industry Co., China’s biggest maker of pumps for concrete, gained 4.9 percent to 19.12 yuan.
‘More Optimistic’
China’s National Development & Reform Commission and the Ministry of Industry & Information Technology will review a stimulus package today to help machinery companies, Shanghai Securities reported, without citing anyone. The country’s benchmark CSI 300 gained 4.3 percent this week amid speculation the central bank will cut benchmark interest rates for the sixth time since September.
“Investors are getting more optimistic with more stimulus plans for different industries in the pipeline,” said Xu Lirong, a fund manager at Franklin Templeton Sealand Fund Management in Shanghai, which oversees the equivalent of $2.56 billion. “Liquidity is improving and moving to equities.”
Hynix added 4.9 percent to 6,890 won in Seoul. Elpida Memory Inc., Japan’s largest memory chipmaker, rose 11 percent to 545 yen. Advanced Semiconductor Engineering Inc., the world’s biggest tester and packager of semiconductor chips, gained 2.2 percent to NT$11.85 in Taipei.
Low Inventories
Intel, the world’s top maker of semiconductors, yesterday reported a 90 percent tumble in fourth-quarter net income as gross margins fell to 53 percent. Profit margins may bottom out in the current quarter and rebound thereafter as orders pick up from customers running low on inventories, the company’s chief financial officer said. The shares rose in late trading.
The Bloomberg Asia Pacific Semiconductors Index has plunged 40 percent in the last six months as analysts surveyed by Bloomberg reduced profit estimates by 72 percent amid a slump in demand and chip prices.
“We need to rebuild inventories, and that could probably happen in the second or third quarter,” Didier Duret, chief investment officer at ABN Amro in Geneva, said in an interview with Bloomberg Television. “That would be the real kick-start of the recovery process.”
South Korea’s banks slumped after Moody’s Investors Service placed 10 financial companies on review for downgrade, saying the weaker won has made servicing foreign currency-denominated debt more expensive.
Hana Financial Group Inc., which controls South Korea’s fourth-biggest bank, slid 4.6 percent to 19,550 won. Shinhan Financial Group Co., parent to the country’s third-largest lender, dropped 3.2 percent to 29,050 won.
HSBC Holdings Plc, Europe’s biggest bank, tumbled 3.3 percent in Hong Kong to HK$63.80, bringing this week’s loss to 15 percent. Goldman Sachs Group Inc. named the shares a “conviction sell,” citing effects from of the worsening U.S. economy and falling property prices.
Senate Vote
The U.S. government agreed to invest $20 billion more in Bank of America, the country’s biggest bank by assets, and backstop a $118 billion asset pool to help it absorb Merrill Lynch & Co. and prevent the financial crisis from deepening. That followed a ruling by the Senate allowing the release of the second half of the $700 billion Troubled Asset Relief Program for financial companies.
Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, rose 0.4 percent to 518 yen. The lender will book a loss of 288 billion yen ($3.2 billion) for the three months to Dec. 31 to write down its investment in stocks, it said yesterday after markets shut. It maintained its 220 billion yen profit forecast for the full year.
Copper Rally
“The market is already discounting these kinds of losses for the latest quarter,” Yumi Nishimura, assistant manager at Daiwa Securities SMBC Co., said in an interview with Bloomberg Television.
Chemical firms rallied after crude oil prices plunged 5 percent, lowering production costs. Kingboard Chemical Holdings Ltd., a Hong Kong-based maker of laminates and industrial materials, rose 6.4 percent to HK$13.40. Asahi Kasei Corp., a maker of synthetic fibers, jumped 5.1 percent to 374 yen after Daiwa Institute of Research rated the shares “outperform” in new coverage.
Sumitomo Metal Mining Co., Japan’s second-biggest copper smelter, added 3.7 percent to 894 yen. BHP Billiton Ltd., the world’s biggest mining company, jumped 3.9 percent to A$29.83 in Sydney. Copper futures for March delivery gained for the first time in three days today, rising as much as 4 percent.
