29 Jan 2009
Jan. 29 (Bloomberg) -- Asian stocks rallied for a third day, led by banks and commodity producers, on optimism lower interest rates and U.S. stimulus measures will revive the global economy.HSBC Holdings Plc, which gets a quarter of its sales in the U.S., surged 8.6 percent as the Federal Reserve planned to buy longer-term Treasury bonds. Westpac Banking Corp., New Zealand's No. 2 lender, jumped 6.3 percent in Wellington as the nation's central bank cut its benchmark rate to a record. BHP Billiton Ltd., the world's biggest mining company, gained 2.7 percent as oil and metals prices rose.
"There's more confidence that the world hasn't ended, and that under the new U.S. government the mess may get sorted out," said Hugh Dive, who helps manage about $3 billion at Sydney-based Investors Mutual Ltd. "It will still take a while for it all to flow through."
The MSCI Asia Pacific Index added 1.5 percent to 84.80 as of 2:09 p.m. in Tokyo. Five stocks advanced for every two that fell on the gauge, which has fallen 5.3 percent this year on mounting signs the global recession is hurting company profits.
The Nikkei 225 Stock Average gained 1.3 percent. Hong Kong's Hang Seng Index climbed 5.7 percent following a three-day holiday for the Lunar New Year. China and Taiwan are shut this week. All markets in the region rose except Singapore and the Philippines.
Sony Corp., the world's second-biggest consumer-electronics maker, advanced in Tokyo as the latest U.S. stimulus drove up the dollar against the yen. Ayala Land Inc., the Philippines' biggest property company, was the MSCI Asia index's worst performer on speculation home demand will decline.
The Standard & Poor's 500 Index climbed 3.4 percent yesterday after a White House official said Obama's team may announce its plan next week to set up a so-called bad bank to buy toxic financial assets. S&P 500 futures slipped 0.5 percent.
Stimulus Advances
After the market closed in New York, the U.S. House passed Obama's $819 billion stimulus package, aimed at lifting the economy out of recession through tax cuts and new spending. The plan will be put to a vote by the Senate.
The MSCI Asia Pacific Index tumbled by a record 43 percent last year as the worsening financial crisis dragged the world's biggest economies into recession. The average valuation of companies on the MSCI gauge has fallen by 38 percent in the past year to 10 times reported profit.
Global growth will almost grind to a halt this year more than $2 trillion of bad assets from the U.S. weighs on economies worldwide, an International Monetary Fund report said. Federal Reserve officials yesterday warned of a prolonged slowdown that may push the U.S. to the brink of deflation.
Policy Action
"The IMF's global growth forecasts have highlighted how severe the global economic slump is," said Shane Oliver, head of investment strategy at AMP Capital Investors, which holds $61 billion in Sydney. "The difference from previous global downturns is that all major countries and regions are sliding together."
The Fed's bond plan and New Zealand's interest-rate cut mark the latest step in a series of measures introduced by governments around the world to unlock frozen credit markets and revive economic growth.
The Fed is ready to buy longer-term Treasury securities if it's effective in improving credit markets, the Federal Open Market Committee said yesterday after meeting in Washington. The Fed left its benchmark interest rate as low as zero.
HSBC surged 8.6 percent to HK$62.40. Mizuho Financial Group jumped 4.3 percent to 243 yen. Sumitomo Mitsui Financial Group Inc. soared 13 percent to 3,780 yen, even after third-quarter profit almost evaporated on bad-loan costs.
Weaker Yen
Westpac jumped 6.3 percent to NZ$20.30. Commonwealth Bank of Australia, which gets 14 percent of its sales from New Zealand, gained 2.2 percent to A$26.90 in Sydney.
The Reserve Bank of New Zealand today lowered the benchmark interest rate by 1.5 percentage points to 3.5 percent and said there's room for further reductions.
Asian exporters gained on optimism the U.S. government measures will shore up consumer demand. Yue Yuen Industrial (Holdings) Ltd., which supplies athletic shoes to Nike Inc. and Adidas AG, climbed 4.9 percent to HK$13.74.
Sony gained 2.7 percent to 1,886 yen and Canon rose 4.3 percent to 2,700 yen, as the weaker yen boosted the value of overseas sales. The Fed announcement helped the dollar strengthen to as much as 90.75 yen in New York from 89.22 at the 3 p.m. close of stock trading in Tokyo yesterday.
BHP, Cnooc
BHP, Australia's largest oil company, gained 2.7 percent to A$30.65. Cnooc Ltd., China's biggest offshore oil company, added 5.3 percent to HK$6.85. PetroChina Co., China's largest producer, jumped 6.1 percent to HK$5.92.
Crude oil for March delivery rose 1.4 percent in New York yesterday, the first advance in three days, while a gauge of six metals traded in London gained 1.1 percent.
Hyundai Steel Co., South Korea's second-largest steelmaker, advanced 6.3 percent to 37,400 won. Korea Zinc Co., the world's second-biggest zinc refiner, gained 4 percent to 91,400 won after Daewoo Securities Co. raised its recommendation on the stock to "buy" from "trading buy," citing signs non-ferrous metals prices are bottoming out.
Ayala slumped 7.1 percent to 6.50 pesos. The Philippine central bank will probably cut its benchmark interest rate by half a percentage point today, according to economists in a Bloomberg News survey, to bolster an economy that is shedding jobs as it slows.
"Very few people can afford to buy homes at this time," said Jonathan Ravelas, a market strategist at Banco de Oro Unibank Inc. in Manila. "Jobs are getting threatened."
