BLBG: Asian Stocks Set for Biggest Gain Since 2003; Oil, Copper Climb
By Sandy Hendry and Shani Raja
Dec. 31 (Bloomberg) -- Asian stocks rose, set for the biggest annual gain since 2003, and oil and copper headed for their largest rallies in at least a decade after China pledged to maintain policies that helped pull the world from recession.
The MSCI Asia Pacific Index climbed 0.7 percent to 120.72 as of 12:47 p.m. in Hong Kong. It has advanced 35 percent this year. The Australian and New Zealand dollars rose, set for record annual gains against the yen. Treasury futures fell, with bonds set for the worst annual performance since at least 1978.
Chinese central bank Governor Zhou Xiaochuan said today he will maintain “moderately loose” monetary policy because 2010 will be a crucial year for strengthening the recovery in the world’s third-biggest economy and “defeating” the financial crisis. A report due tomorrow will probably signal the fastest expansion in the nation’s manufacturing since April 2008.
“This year has certainly been the year of China, which single-handedly pushed up commodity prices, held up intra- regional trade and benefited its neighbors,” said Daphne Roth, head of Asian equity research in Singapore at ABN Amro Private Banking, which oversees about $21 billion in the region. “We’re still positive on 2010, as there remains a lot of filtering down of fiscal stimulus. The low-hanging fruit though has been picked.”
This year’s advance in Asian stocks is part of a global rally that has boosted the MSCI World Index by 28 percent, on course for its steepest increase since 2003. The gauge plunged 42 percent last year, the most since its inception 40 years ago, hurt by the collapse of the subprime-mortgage market in the U.S. and the bankruptcy of Lehman Brothers Holdings Inc.
Australia Advances
Materials companies have led gains this year among the 10 industries in the MSCI Asia Pacific Index. Fortescue Metals Group Ltd., Australia’s third-biggest iron-ore producer, climbed 2.1 percent today to A$4.44. BHP Billiton Ltd., the world’s largest mining company, added 1 percent to A$43.12 and was the biggest contributor to the index’s advance today and this year.
Australia’s S&P/ASX 200 Index rose 0.8 percent, and China’s Shanghai Composite Index added 0.4 percent. Exchanges in Japan and South Korea were closed today. Futures on the Standard & Poor’s 500 Index rose 0.1 percent.
Qantas Airways Ltd. advanced 2.1 percent to A$2.99 after the International Air Transport Association said yesterday international air travel rose 2.1 percent last month.
Commodities Rally
Australia’s dollar rose 0.3 percent to 89.68 U.S. cents and added 0.3 percent to 82.86 yen on higher prices for commodity exports. New Zealand’s dollar climbed 0.6 percent to 72.63 U.S. cents. Both currencies have risen about 30 percent against the yen this year. The euro advanced 0.2 percent to $1.4367, taking its gain this year to 2.8 percent.
Oil rose for a seventh day, the longest winning streak since October, as colder weather in the U.S. increased demand for heating fuels. Crude oil for February delivery rose as much as 0.7 percent to $79.85 a barrel, and was at $79.57. Futures are set for a 78 percent advance this year, the most since 1999, and have tripled over the past decade.
Copper in London gained as much as 1.2 percent today to $7,415 a metric ton, the highest since September 2008. The metal has more than doubled this year, heading for the biggest increase in more than two decades. Gold for immediate delivery rose 0.4 percent to $1,097.7 an ounce, taking this year’s advance to 24 percent, a ninth straight annual gain. Soybeans in Chicago have gained 6.6 percent this year, while wheat dropped 11 percent amid rising stockpiles.
The Reuters/Jefferies CRB Index of 19 raw materials has jumped 23.6 percent this year, the biggest gain since 1979 as demand surged from China. The gauge slumped 36 percent in 2008, the biggest drop in half a century.
No Huge Gains
“I don’t see huge gains in asset markets in 2010 unless someone is willing to take a huge risk by putting all his money in wheat, corn or soy beans,” Marc Faber, publisher of the “Gloom Boom & Doom” newsletter, said yesterday. “A year ago, I had a strong conviction that Asia was very oversold and cheap -- I don’t have that conviction today.”
In China, the Federation of Logistics and Purchasing will tomorrow say the Purchasing Managers’ Index for December rose to 55.4 from 55.2 in November, according to a Bloomberg survey of economists. Gross domestic product will grow 8.5 percent this year, topping the government’s 8 percent target, economists forecast.
Carmaker Rally
Asia’s automakers were among the biggest gainers this year. BYD Co., the Chinese maker of cars and batteries, rose more than fivefold after an HK$1.8 billion ($263 million) investment from Warren Buffett, boosting its profile overseas. It climbed 2.9 percent today. Geely Automobile Holdings Ltd. surged more than sixfold following its bid for Ford Motor Co.’s Volvo Car Corp. unit. India’s Tata Motors Ltd. gained almost fivefold.
Asian companies were also among the world’s biggest by market value. PetroChina Co.’s 41 percent advance this year makes China’s largest oil company the most valuable, and Industrial & Commercial Bank of China Ltd. is ranked fourth after Exxon Mobil Corp. and Microsoft Corp., following the lender’s 56 percent climb this year. PetroChina climbed 0.9 percent today and ICBC gained 1.4 percent.
“Investors are generally a lot more relaxed,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “The sixty-four-million dollar question is what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating.”
Debt Markets
The yield on 10-year Treasury futures contracts for March delivery was at 4.07 percent. The yield on the benchmark note climbed to as high as 3.82 percent yesterday, near 3.86 percent reached Dec. 29, the highest since Aug. 10. It has increased 1.58 percentage points this year.
U.S. securities have fallen 3.5 percent this year, the most this year among Group of Seven countries, according to Bank of America Merrill Lynch indexes.
Bond risk in the Asia-Pacific region has tumbled this year as measured by indexes of credit-default swaps. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan was at 98 basis points today, and the Markit iTraxx Australia was at 86 basis points. Both indexes have declined from more than 300 basis points at the start of the year.
By contrast, Japan credit risk rose last month. The Markit iTraxx Japan index rose 3 basis points yesterday to 133 basis points, the highest since Dec. 22, according to CMA DataVision.
To contact the reporters on this story: Sandy Hendry at shendry@bloomberg.net
