BLBG: Asian Stocks Rise on U.S. Consumer Confidence, Commodity Prices
Asian stocks rose, driving the MSCI Asia Pacific Index to the highest level in almost eight months, after U.S. consumer confidence jumped the most in six years and commodity prices climbed.
Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., surged 8.5 percent in Hong Kong. Toyota Motor Corp., which gets 31 percent of its revenue in North America, rose 2.8 percent in Tokyo. PetroChina Co., the country’s largest oil producer, jumped 5.2 percent after crude-oil rose to a six-month high yesterday. Hang Lung Properties Ltd. surged 8.7 percent after Hong Kong’s government announced a $2.2 billion stimulus package.
“Signs of a turnaround are coming through,” said Matt Riordan, who helps manage about $3.1 billion at Paradice Investment Management in Sydney. “People who were initially dismissing this as a bear-market rally are concerned it might be sustainable.”
The MSCI Asia Pacific Index gained 1.7 percent to 100.79 as of 2:06 p.m. in Tokyo, set to close at its highest level since Oct. 3. The gauge, which has rallied 43 percent from a more than five-year low on March 9, briefly pared gains after North Korea threatened a military strike in response to South Korea joining a program to seize weapons shipments.
Hong Kong’s Hang Seng Index climbed 4.7 percent. Japan’s Nikkei 225 Stock Average jumped 1.4 percent as the government reported a smaller-than-expected decline in exports. Australia’s S&P/ASX 200 Index added 0.7 percent.
Government Stimulus
Genting Singapore Plc, which is building a casino and theme park in the city, tumbled 17 percent after shareholders sold shares at a discount. Soho China Ltd., a real-estate company, lost 2.5 percent in Hong Kong on plans to sell convertible bonds, while Malaysian peer Eastern & Oriental Bhd. sank 3.5 percent after announcing a rights offer.
Futures on the U.S. Standard & Poor’s 500 Index were little changed. The gauge climbed 2.6 percent yesterday after the Conference Board’s index of U.S. consumer confidence surged to 54.9, the biggest gain since April 2003. Consumer confidence was projected to rise to 42.6, according to a Bloomberg News survey of economists. A reading above 50 indicates optimists outnumbered pessimists.
Li & Fung jumped 8.5 percent to HK$20.85. Toyota climbed 2.8 percent to 3,700 yen. Sony Corp., which gets 24 percent of its sales in America, rose 0.8 percent to 2,485 yen.
“Companies are restructuring and cutting costs, so as long as top line numbers don’t change, they’ll likely see double- digit profit growth,” said Makoto Haga, president of Tokyo- based hedge fund Wing Asset Management Co. “It’s not that consumers don’t have money. Sentiment is the issue.”
Gone Too Far?
The MSCI Asia Pacific Index’s rally since March came on speculation government stimulus and interest-rate cuts worldwide will succeed in reviving growth. Japan’s exports fell 39.1 percent in April from a year earlier, the Finance Ministry said today, less than the 42 percent decline economists had estimated.
The MSCI gauge had fallen in three out of the previous four days amid concern stock valuations had overpriced earnings potential. Companies in the measure trade at an average 1.4 times the book value of assets, 17 percent higher than at the end of 2008.
“The change in sentiment over the last couple of months has been amazing,” said Paradice’s Riordan. “The question is: has it all gone too far?”
PetroChina jumped 5.2 percent to HK$8.66 as oil and copper prices rose following the Conference Board report. Cnooc Ltd., China’s largest offshore oil producer, climbed 5.5 percent to HK$9.84. BHP Billiton Ltd., the world’s biggest mining company, added 1.7 percent to A$34.86.
Further Action
Crude for July delivery added 1.3 percent to a six-month high of $62.45 a barrel in New York. Copper futures for July delivery gained 1.9 percent. The Baltic Dry Index, a gauge of shipping costs for commodities, rose for a 17th day in London on signs China is stockpiling materials including iron ore.
Hang Lung jumped 8.7 percent to HK$26.25, while Henderson Land Development Co., a developer controlled by billionaire Lee Shau-kee, surged 7.4 percent to HK$45.95 as Hong Kong unveiled HK$16.8 billion ($2.2 billion) of tax cuts, fee waivers and spending to spur growth.
The government may “do something further” if conditions worsen, Financial Secretary John Tsang said at a briefing in Hong Kong yesterday. The latest measures push the government’s stimulus and relief spending since 2008 to HK$87.6 billion, or about 5.2 percent of gross domestic product, Tsang said.
The deepening financial crisis prompted governments to pledge funds including $285 billion from Japan to bolster growth. The MSCI Asia Pacific Index slumped by a record 43 percent in 2008 as the global economy slowed.
Genting Singapore slumped 17 percent to 72 Singapore cents. Golden Hope Ltd. and Lakewood Sdn Bhd. sold 854 million shares at 72 Singapore cents each, according to a pricing document sent to investors.
Soho China fell 2.5 percent to HK$4.78 after announcing plans to raise HK$2.8 billion selling convertible bonds. Eastern & Oriental slumped 3.5 percent to 83 sen, after saying it’s planning a rights offer as it reported a fourth-quarter loss.
