Thursday, January 26, 2012

Asian Stocks Advance for Second Day as Fed Considers More Asset Purchases

Asian stocks rose for a second day after the Federal Reserve extended its pledge to keep interest rates low and Chairman Ben S. Bernanke said the central bank is considering more asset purchases to boost economic growth.

Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., advanced 3.5 percent in Hong Kong. Cnooc Ltd., China’s largest offshore energy explorer, paced gains among energy firms after oil and metal prices climbed. Tokyo Electric (9501) Power Co. rose 7.4 percent after a report that the company will accept public funds to stay afloat.

The MSCI Asia Pacific Index (TPX) gained 0.7 percent to 122.16 as of 1:38 p.m. in Tokyo with all 10 industry groups on the measure advancing. The gauge gained 0.5 percent over the past three days, while Hong Kong’s market was closed for the Lunar New Year holiday.

The Fed’s statement “is in favor of stock markets,” said Ayako Sera, a market strategist in Tokyo at Sumitomo Trust & Banking Co., which manages the equivalent of $321 billion. “The Fed is clearly saying it will print more money and do more policy easing.”

Japan’s Nikkei 225 Stock Average fell 0.4 percent, while South Korea’s Kospi Index added 0.2 percent. New Zealand’s NZX 50 Index gained 0.1 percent in Wellington after central bank Governor Alan Bollard signaled he may keep interest rates at a record low for longer than expected with inflation being contained.

Hong Kong’s Hang Seng Index advanced 1.2 percent. Trading volume of stocks in the measure was 9.4 percent above the average over the past 10 days after the market reopened following a three-day holiday break, according to data compiled by Bloomberg. Stock markets in China, Taiwan, Vietnam, Australia and India are closed today for public holidays.

‘Monetary Accommodation’
Futures on the Standard & Poor’s 500 Index fell less than 0.1 percent today. The gauge rose 0.9 percent in New York yesterday after the Fed extended its pledge to keep interest rates low through at least late 2014.

Policy makers are “prepared to provide further monetary accommodation if employment is not making sufficient progress towards our assessment of its maximum level, or if inflation shows signs of moving further below its mandate-consistent rate,” Bernanke said yesterday after a Federal Open Market Committee meeting in Washington. Bond buying is “an option that’s certainly on the table.”

Exporters to the U.S. advanced. Li & Fung gained 3.5 percent to HK$17.80. Techtronic Industries Co. (669), a maker of Ryobi power tools and Hoover vacuum cleaners that counts North America as its largest market, added 2.6 percent to HK$9.16.

‘Underwriting Recovery’
“Bernanke is presenting the world with a gift,”Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., said in a Bloomberg Television interview. The firm oversees $46 billion. “He wants to underwrite the recovery and underwriting the recovery is very good for equity markets and risk assets.”

The MSCI Asia Pacific Index (TPX) gained 6.6 percent this year through yesterday, compared with increases of 5.4 percent by the S&P 500 and 4.3 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 1.3 times book value. That compares with 2.2 times for the Standard & Poor’s 500 Index in the U.S. and 1.4 times for the Europe Stoxx 600 Index in Europe.

Energy firms gained the most among the 10 industry groups on the Asia-Pacific gauge as crude oil for March delivery rose as much as 66 cents to $100.06 a barrel on the New York Mercantile Exchange. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum climbed 0.7 percent yesterday for a third day.

Energy Firms Rise
Cnooc Ltd. (883), China’s largest offshore energy explorer, rose 2.1 percent to HK$15.82. China Coal Energy Co. advanced 2.6 percent to HK$10.16, while Yanzhou Coal Mining Co. added 2.5 percent to HK$19.36. Zhaojin Mining Industry Co. gained 7.3 percent to HK$13.54.

Tokyo Electric rose 7.4 percent to 217 yen after the Yomiuri newspaper reported today the utility will accept a 1 trillion yen ($12.9 billion) infusion of public funds to help it survive after the Fukushima nuclear disaster in the wake of Japan’s earthquake and tsunami last year. The Tokyo-based company is relying on public money, as the government estimates Tepco faces 4.5 trillion yen in compensation claims by March next year.

The radiation release from reactor meltdowns after the catastrophe forced 160,000 people to flee their homes and damaged farming, forestry and fisheries businesses.

-with assistance from Rishaad Salamat and Lynn Thomasson in Hong Kong. Editors: John McCluskey, Jason Clenfield

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