BLBG: Asian Chip Stocks Advance on Memory Prices; Utilities Retreat
Asian shares rose, lifting the benchmark index by the most in three weeks, after U.S. President- elect Barack Obama said stimulus spending will continue for years, boosting confidence U.S. consumption will rebound.
Fuji Heavy Industries Ltd., the maker of Subaru cars, soared 20 percent following Obama’s comments and as a weaker yen boosted the profit outlook for overseas sales. Samsung Electronics Co., the world’s biggest computer memory chipmaker, advanced 4 percent. Rio Tinto Group, the No. 3 mining company globally, surged 7.4 percent after copper prices jumped the most in a month.
The MSCI Asia Pacific Index jumped 1.8 percent to 92.50 as of 1:32 p.m. in Tokyo, the steepest gain since Dec. 17. The benchmark has rallied 23 percent since falling to a five-year low in November during the market’s worst annual performance in its two-decade history. The cost of protecting Asian and Australian bonds from default fell to a two month low today.
“There are high expectations for all those stimulus measures, on both the fiscal and monetary fronts,” said Lim Chang Gue, a fund manager at Samsung Investment Trust Management Co. in Seoul, which oversees about $50 billion in assets. “Risk appetite is slowly growing, and sectors that have been deemed as riskier are leading the charge.”
Japan’s Nikkei 225 Stock Average added 1.6 percent to 9,227.43, rising for a seventh-straight day, the longest streak since April 2006. Most major markets in the region gained, while those in Hong Kong and New Zealand retreated. China Construction Bank Corp., the nation’s second-largest lender, fell in Hong Kong as Bank of America Corp. prepared to sell up to $2.8 billion worth of the company’s stock.
U.S. stocks climbed yesterday, with the Standard & Poor’s 500 Index gaining 0.8 percent. S&P futures rose 0.1 percent in trading today.
Tax Cuts
Obama, who takes office on Jan. 20, said he expects to inherit a $1 trillion budget deficit and that similar shortfalls are in store “for years to come.” He’s pushing for a stimulus plan of about $775 billion over two years, including tax cuts worth $500 for individuals, according to a House Democratic aide, and his economic stimulus plan includes the largest infrastructure investment since the 1950s.
Fuji Heavy surged 20 percent to 293 yen. Honda Motor Co., Japan’s second-biggest carmaker, jumped 11 percent to 2,210 yen, while bigger rival Toyota Motor Corp. added 5.3 percent to 3,210 yen. Samsung jumped 4 percent to 518,000 won in Seoul.
The Markit iTraxx Australia index of credit-default swaps fell 25 basis points to 285 at 12:26 p.m. in Sydney, the first time the Series 10 benchmark dipped below 300 since mid-November, Citigroup Inc. prices show. The Markit iTraxx Japan index was down 6 basis points at 275 as of 1:05 p.m. in Tokyo, Barclays Capital prices show.
Forecast Cut
BNP Paribas’s chief Asia economist Richard Iley slashed his growth forecasts for the region today, predicting contractions in Hong Kong, Taiwan, South Korea, Singapore and Thailand in 2009. Expansion is likely to resume in 2010 due to massive policy initiatives globally, he wrote in a report.
“One of the few investment themes we have in 2009 is public spending by governments globally,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which manages $96 billion. “Resource companies, steelmakers and machinery manufacturers are industries this favors.”
Rio jumped 7.4 percent to A$46.65. Mitsui & Co., Japan’s second-largest trading company, soared 6.9 percent to 1,037 yen. China Cosco Holdings Co., the world’s largest operator of commodity ships, rallied 11 percent to HK$6.91 in Hong Kong.
‘Oversold Commodities’
Copper futures for March delivery jumped 8.5 percent in New York, the most since Dec. 8, and surged by the daily limit in Shanghai today amid speculation Obama’s spending package will lift demand for materials. A measure of six metals traded in London jumped 4.6 percent.
“Right now, as of today, I would rather buy a basket of oversold industrial commodities” than gold, said Marc Faber, publisher of the Gloom, Boom & Doom Report. Faber, who successfully predicted the 1987 stock crash as well as the rally in the dollar in 2008, spoke in an interview with Bloomberg Television.
Hitachi Metals Ltd., a maker of specialty steel, soared by its daily limit, or 16 percent, to 575 yen. Posco, Asia’s third- largest steelmaker, advanced 3.8 percent to 421,500 won in Seoul. BlueScope Steel Ltd., Australia’s No. 1 maker of the alloy, rose 6.8 percent to A$4.06.
‘Tentative Recovery’
Iron ore, a raw material for steel, has risen 24 percent since Oct. 31, when it fell to the lowest in three years, based on data compiled by industry publication Metal Bulletin. That indicates steel is set for a “tentative recovery,” according to Michael Rawlinson, head of mining, resources and energy at London-based brokerage Liberum Capital Ltd.
The dollar rose for a sixth day against the yen, the longest run of gains in two years, after General Motors Corp. said it has enough government funding and may not need additional loans. The dollar strengthened to as much as 94.14 yen today, near a five- week high. A weaker yen boosts the value of overseas sales for Japanese exporters.
Nidec Corp., the world’s biggest maker of disk-drive motors, jumped 10 percent, to 4,070 yen. Daikin Industries Ltd., a Japanese maker of air conditioners that earns more than 60 percent of its sales overseas, rose 14 percent to 2,820 yen.
Ricoh Co., Japan’s second-biggest maker of office equipment, gained 7.2 percent to 1,299 yen. Kunihiko Kanno, an analyst at Credit Suisse in Tokyo, lifted the stock to “outperform” from “neutral.”
China Construction Bank
The U.S. market “appears to be more stable than anticipated,” Kanno wrote in a report. “Compared with Europe, the U.S. market focuses on higher-value-added products, and this could be a big advantage for Ricoh.”
China Construction Bank lost 6.1 percent to HK$4.18 in Hong Kong and fell 1.8 percent in Shanghai. Bank of America sold 5.62 billion shares in the lender at HK$3.92 apiece, a 12 percent discount to the closing price yesterday.
Malaysia’s Parkson Holdings Bhd., operator of 46 department stores in China, slumped 9.4 percent to 3.88 ringgit after sales growth in the world’s most populous nation slowed by a third to between 7 percent and 8 percent.
CapitaCommercial Trust, the office landlord partly owned by Singapore’s largest developer, rallied 13 percent to S$1.06 after saying it will refinance as much as S$580 million ($393 million) of mortgage-backed securities through bank loans.
Panasonic Corp., the world’s largest maker of consumer electronics, jumped 7.1 percent after President Fumio Ohtsubo said the company will “come close” to meeting its television sales target this year.
