BLBG: Asian Stocks Climb for Third Week in Four on India Elections
Asian stocks climbed for the third week in four as an election victory by India’s ruling party spurred optimism economic reforms will follow and Goldman Sachs Group Inc. became more bullish on commodities companies.
India’s Sensex index soared 14 percent, the steepest weekly advance since March 1992. ICICI Bank Ltd., the nation’s second- largest bank, and Tata Steel Ltd., India’s biggest producer, rose more than 20 percent. Japanese trading house Mitsubishi Corp. climbed 3.7 percent as Goldman lifted the stock to “buy” and said oil prices are likely to continue rising.
“Markets are euphoric,” said Rahul Chadha, the Hong Kong- based head of Indian equities at Mirae Asset Global Investment, with $46 billion in global equities. “The focus by federal and state governments on development will lead to a structural re- rating of India.”
The MSCI Asia Pacific Index jumped 2.1 percent this week to 99.35. Asian markets have rallied 41 percent since the MSCI benchmark dropped to a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average lost 0.4 percent, a second consecutive weekly decline. Benchmark indexes throughout the region climbed, except in Australia, New Zealand, Pakistan and China.
MSCI’s Asian index plunged by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.
New Government
The gauge has rallied since March on optimism government measures to ease the financial crisis are working. Earnings estimates for companies included in the MSCI benchmark started to rise in April after falling for almost a year, data compiled by Bloomberg show.
Prime Minister Manmohan Singh’s Congress party and its allies won 260 of the 543 seats in the lower house of India’s parliament, the Election Commission said on May 16. The victory will allow Singh to form a government without the support of communist lawmakers who frustrated plans to entice foreign investment into the emerging economy.
“The election result is extremely positive and very, very bullish,” said Madhusudan Kela, head of equities at Reliance Capital Asset Management, the nation’s largest money manager. “This will provide a government which is stable and has powers to take decisions.”
ICICI Bank jumped 22 percent to 702.65 rupees. Tata Steel soared 34 percent to 363.65 rupees. Reliance Capital Ltd., the Indian finance company owned by billionaire Anil Ambani, surged 53 percent higher to 903.3 rupees.
Mitsubishi Corp., which generates more than half its profit from commodities trading, rose 3.7 percent to 1,728 yen. Goldman Sachs lifted its recommendation on the stock to “buy” from “neutral” on May 19.
Oil Forecast
Citic Resources Holdings Ltd., a Hong Kong-listed oil supplier, surged 23 percent to HK$2.00 after Goldman Sachs boosted the shares to “buy” from “sell” as oil is likely to average $55 per barrel in the last six months of 2009 and $70 in 2010. Crude climbed above $62 for the first time since November this week.
“Oil prices are likely to trend higher through the second half of 2009 and 2010,” Kelvin Koh, a Hong Kong-based analyst at the brokerage, said in the report. There is “upside risk” to the forecasts, he said.
Shikibo Ltd., a maker of materials used in medical masks, surged 42 percent to 191 yen as the first cases of swine flu in Tokyo were confirmed. The government said on May 22 that Japan has almost 300 cases of the virus known as H1N1 since detecting its first infections two weeks ago.
Panasonic Corp., the world’s largest maker of plasma televisions, tumbled 9 percent to 1,324 yen. On May 15, the company cut its dividend and forecast a net loss of 195 billion yen ($2.06 billion) for this year, compared with a 379 billion yen deficit a year earlier.
