Markets

Asian stocks gain for third week running

By Jonathan Burgos (China Daily)
Updated: 2011-04-11 14:40

SINGAPORE - Asian stocks gained for a third week as takeovers and the improving United States economy bolstered optimism that the global recovery can be sustained. Stocks also rose as Japan pledged support for businesses hit by the March 11 earthquake and made progress stabilizing a nuclear power plant.

Samsung Engineering Co, the South Korean builder of petrochemical plants and industrial facilities, climbed 9 percent in Seoul on speculation it will benefit from rebuilding efforts in Japan. Equinox Minerals Ltd surged 30 percent in Sydney after Minmetals Resources Ltd made an unsolicited offer of about $6.5 billion for the owner of Africa's largest copper mine. Yue Yuen Industrial (Holdings) Ltd, the maker of shoes for Nike Inc that gets 29 percent of sales from the US, climbed 4.5 percent.

Related readings:  Stocks climb as China Unicom, HSBC advance  China stocks close higher Friday  Stocks surge as uncertainty eases  China stocks close higher Thursday

"We're seeing more positive data coming out of the US," said Daphne Roth, head of Asian equity research at ABN Amro Private Banking, which oversees about $14 billion in the region. "Merger-and-acquisition activities are a positive sign, underscoring the companies' need to expand and grow their businesses."

The MSCI Asia Pacific Index climbed 0.9 percent to 136.54 as of last week, driving the regional benchmark index to its highest level since last month's earthquake. The gauge has risen for the past three weeks as the US unemployment rate dropped to a two-year low and companies from Hitachi Ltd and Toyota Motor Corp said factories in Japan that were shut after the nation's strongest earthquake on record will reopen this month.

Hong Kong's Hang Seng Index climbed 2.5 percent last week, while the Shanghai Composite Index increased 2.1 percent. Taiwan's Taiex Index rose 2.2 percent. Australia's S&P/ASX 200 Index gained 1.6 percent.

Japan aftershock

Japan's Nikkei 225 Stock Average gained 0.6 percent since April 1 amid speculation damage was limited from a 7.1-magnitude aftershock that struck Japan on the night of April 7. Earlier that day, the Bank of Japan unveiled the earthquake lending facility, while voicing concern the destruction caused by the March 11 temblor may depress economic growth in the coming months.

The Nikkei 225 on March 14 and March 15 posted its biggest two-day plunge since the 1987 stock-market crash after the quake and tsunami on March 11 left more than 27,000 people dead or missing and caused radiation leaks at Tokyo Electric Power Co's Fukushima Daiichi nuclear power plant. The benchmark Nikkei 225 has fallen 6.4 percent since March 10.

Tokyo electric

Tokyo Electric, which soared 24 percent on Friday, declined 6.5 percent through the week to 420 yen. The stock has plunged 80 percent since the earthquake.

"Investors are looking at a scenario that there will be reconstruction opportunities in Japan, but I think the issues will be more far-reaching," said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management, which oversees about $72 billion. "Aside from the risk of nuclear fallout from Japan, we are still faced with a much higher inflationary situation because of higher demand for fuel and food."

Samsung Engineering jumped 9 percent to 231,000 won in Seoul. Hyundai Heavy Industries Co, the South Korean shipbuilder that also supplies industrial machinery and construction equipment, climbed 5.2 percent to 547,000 won. Fanuc Ltd, Japan's largest industrial robot maker, gained 4 percent to 12,840 yen.

Fast Retailing Co, the operator of the Uniqlo casual-clothing chain, surged 12 percent to 11,940 yen. The retailer raised its full-year net income forecast by 18 percent to 60 billion yen ($703 million) on overseas growth and lower costs. Also, the company said it will form a venture with Mitsubishi Corp to operate Uniqlo clothing stores in Thailand.

Australian M&As

Minmetals Resources, the Hong Kong unit of the Chinese mainland's No 1 metals trader, on April 4 offered C$7 a share for Equinox, 23 percent more than the Perth-based company's closing price in Toronto on April 1. The Australian government had no objection to the deal, Minmetals said on Friday.

Singapore Exchange Ltd, which abandoned its $8.8 billion bid for ASX Ltd after the deal was rejected by Australian Treasurer Wayne Swan, jumped 6.6 percent to S$8.38. ASX dropped 3.1 percent to A$33.33.

"SGX was de-rated when it announced the deal as shareholders didn't really like that they were offering a very a high premium," said Anand Pathmakanthan, an analyst at Nomura Holdings Inc in Singapore. "It is only logical that with the deal called off, the share price should re-rate."

US unemployment

Exporters advanced after a government report showed the US unemployment rate dropped to a two-year low of 8.8 percent in March from 8.9 percent in February. Applications for jobless benefits fell 10,000 in the week ended April 2 to 382,000, the fewest since Feb 26, US Labor Department figures released on April 7 showed.

Yue Yuen, the world's biggest contract manufacturer of athletic shoes, gained 4.5 percent to HK$26.65 in Hong Kong. Li & Fung Ltd, the biggest supplier to Wal-Mart Stores Inc, the supplier of toys and home furnishings that counts the US as its biggest market, increased 1.4 percent to HK$40.50 in Hong Kong. Foxconn International Holdings Ltd, the world's largest contract maker of mobile phones, climbed 3.5 percent to HK$4.72. HTC Corp, a Taiwanese handset maker that gets about half of its sales from the Americas, rose 1.8 percent to NT$1,160.

Energy producers rally

"There is further evidence of the US economy laying the platform for a self-sustaining recovery," said Tim Schroeders, a Melbourne-based money manager at Pengana Capital Ltd, which holds about $1 billion, including Japanese equities. "It appears there is increasing willingness to look through nearer-term issues such as the Japanese earthquake and tsunami, the Libyan conflict and European debt issues."

Energy producers gained after oil climbed above $110 a barrel as a fire burned at Libya's Sarir field, heightening concern that spreading conflict in North Africa and the Middle East will disrupt supplies.

CNOOC Ltd, the Chinese mainland's biggest offshore oil and gas producer, rose 1.2 percent to HK$20.75 in Hong Kong. Santos Ltd, Australia's No 3 energy company, increased 2.1 percent to A$16.28.

SK Holdings Co, the parent of oil refiner SK Innovation Co, advanced 4.7 to 178,000 won. Samsung Securities Co raised its share-price forecast by 23 percent to 273,000 won, saying the stock is "excessively" undervalued.

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