BLBG: Asian Stocks Climb for Second Week as Growth Outlook Improves
Sept. 19 (Bloomberg) -- Asian stocks advanced for a second week, sending the MSCI Asia Pacific Index to the highest in over a year, as speculation mounted the global recession is ending and commodities prices rallied.
Zijin Mining Group Co., China’s largest bullion producer, rose 3.9 percent as gold prices reached a record high. Posco jumped 5.3 percent, leading gains by the region’s steelmakers, after BHP Billiton Ltd. predicted steel production will double in the next 15 years. Aiful Corp., Japan’s third-largest consumer lender by revenue, plunged 44 percent, dragging rivals lower as well, as the company negotiated to suspend payments on its debt.
“The flow of good economic news has become an avalanche,” said Shane Oliver, head of investment strategy with AMP Capital Investors Ltd., which manages about $75 billion. “Six months ago investors were allowing for a Great Depression-type of scenario. Instead, we’re seeing clear evidence of a recovery.”
The MSCI Asia Pacific Index climbed 0.46 percent this week to 118.36. Asian markets have rallied 68 percent since the MSCI benchmark dropped to a five-year low on March 9.
Japan’s Nikkei 225 Stock Average fell 0.7 percent, joining the Philippines and Singapore as the only Asian markets to post losses. India’s Sensex index climbed 0.2 percent led by software makers including Tata Consultancy Services Ltd. that got a boost from improved prospects for global growth.
U.S. retail sales excluding automobiles gained 1.1 percent in August, according to a Sept. 15 report, while the Federal Reserve Bank of New York said its general economic index rose in September.
Post-Lehman Rebound
On Sept. 17, South Korea reported a 7.6 percent increase in department store sales for August, the biggest jump since January, while the Bank of Japan upgraded its assessment of the economy to say it sees “signs of recovery.”
Billionaire investor Warren Buffett said on Sept. 15 his company is buying equities, while Federal Reserve Chairman Ben S. Bernanke said the U.S. recession is “very likely” over.
“The next six months seem reasonably easy to anticipate: no inflation, good economic growth,” Former Fed Chairman Alan Greenspan said on Sept. 16. “It looks good for the near term.”
MSCI’s Asian index has recovered to levels last seen before the collapse of Lehman Brothers Holdings Inc. a year ago this week. The ensuing credit crisis sparked more than $1.6 trillion in losses and writedowns at financial institutions and helped send economies globally into recession. The benchmark remains 46 percent below its all-time high reached in November 2007.
The 32 percent advance this year by the Asian gauge tops an 18 percent rise by the Standard & Poor’s 500 Index and 23 percent climb by Europe’s Stoxx 600 Index.
Gold Reaches Record
The MSCI Asia Pacific Index’s six-month rally has been driven by better-than-estimated economic reports and corporate earnings. Of 646 companies on the gauge that reported net income for the latest quarter, 226 beat analyst predictions, compared with 138 that missed.
Zijin Mining rose 3.9 percent over the week to HK$7.97 in Hong Kong. PT Bumi Resources, Indonesia’s biggest coal producer, surged 6.4 percent. BHP, the world’s largest mining company, added 1 percent to A$38.70. Woodside Petroleum Ltd., Australia’s second-largest oil producer, surged 5 percent to A$50.65.
A measure of six metals traded on the London Metal Exchange, including copper and zinc, climbed 0.8 percent, the steepest advance in six weeks. Gold futures rose to a record settlement price of $1,020.20 per dollar on Sept. 16, spurred by a continuing slump in the dollar. Oil jumped 3.97 percent to $72.04 per barrel.
Steel Production
Posco, South Korea’s biggest steelmaker, gained 5.4 percent to 511,000 won. JFE Holdings Inc., the world’s third-largest, added 4.6 percent to 3,380 yen, after saying it will restart a scrap furnace as early as next month to meet a recovery in demand. Nippon Steel Corp., the global No. 2, added 1.2 percent to 352 yen as it brought a blast furnace online to offset production lost from a plant failure.
Increasing steel use in China and emerging markets foretell rising demand for iron ore in the future, according to Vicky Binns, BHP’s head of commodity analysis. A surge in Chinese imports of coking coal is “sustainable,” she said.
Dalian Dayang Trands Co. soared 50 percent to 15.02 yuan after billionaire Warren Buffett praised the company’s suits in a video congratulating the company and Chairman Li Guilian on the company’s 30th anniversary.
LG Chem Ltd., South Korea’s biggest chemicals maker, climbed 9.6 percent to 229,500 won this week after the Herald Business newspaper reported on Sept. 15 Volkswagen AG may buy car batteries from the South Korean company.
Aiful Debt
Aiful slumped 44 percent to 134 yen. The company said on Sept. 18 it’s seeking to delay repayments on 280 billion yen ($3 billion) in debt. Funding capacity has weakened owing to “increased expenses as the result of continuing demands for returns of excess interest payments,” the Kyoto-based company said.
Promise Co., Japan’s largest consumer lender by revenue, dropped 20 percent, while Orix Corp., the nation’s biggest non- bank financial company, retreated 14 percent.
“Aiful is just the tip of the iceberg,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $55 billion. “What’s behind Aiful’s slump is a deepening recession.”
Japanese stocks were also bombarded by the weakening dollar, which reduces the local value of sales generated abroad. Mazda Motor Corp., Japan’s second-largest car exporter, lost 3.8 percent to 228 yen. Panasonic Corp., which generates almost half its sales abroad, declined 1.8 percent to 1,401 yen. The U.S. Dollar Index fell to the lowest in almost a year this week. The dollar depreciated against the yen to as low as 90.13, the weakest since February.
To contact the reporter responsible for this story: Patrick Rial in Tokyo at prial@bloomberg.net.
