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Asian Stocks Rise on Greece Debt Deal; China Shares Fall

By Adam Haigh and Yoshiaki Nohara
November 27, 2012 5:54 AM EST 13 Comments
Mario Draghi, president of the European Central Bank.
Photographer: Ralph Orlowski/Bloomberg
Mario Draghi, president of the European Central Bank.

Asian stocks rose for a fifth day after European finance ministers cut borrowing costs for Greece. Chinese shares fell, with the Shanghai Composite Index closing at a three-year low, even as the nation’s industrial profits accelerated.

CSL Ltd. (CSL), Australia’s biggest drugmaker, surged 6.9 percent in Sydney to a record after saying it expects profit growth of about 20 percent. Tatts Group Ltd. jumped 2.8 percent after the lottery operator won a 40-year gaming contract in South Australia. China Rongsheng Heavy Industries Group Holdings Ltd. and Glorious Property Holdings Ltd. each fell more than 3 percent after billionaire Zhang Zhi Rong quit as chairman of the companies.

The MSCI Asia Pacific Index (MXAP) advanced 0.4 percent to 123.84 as of 7:50 p.m. in Tokyo, extending the benchmark gauge’s longest winning streak since the second week of September. International Monetary Fund Managing Director Christine Lagarde said her aim to get Greece’s debt on a “sustainable path” was achieved in discussions in Brussels.

“They jumped the latest hurdle in the crisis, and the market is taking a sigh of relief,” said Hitoshi Asaoka, Tokyo- based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “Budget issues for Greece will probably come back a few times.”

Japan’s Nikkei 225 Stock Average (NKY) gained 0.4 percent, Australia’s S&P/ASX 200 Index advanced 0.7 percent and South Korea’s Kospi Index jumped 0.9 percent. Taiwan’s Taiex Index added 0.3 percent.

China’s Shanghai Composite Index slid 1.3 percent, closing at its lowest level since Jan. 23, 2009, while Hong Kong’s Hang Seng Index lost 0.1 percent.

‘No Confidence’

“Investors have no confidence in long-term growth prospects and the government isn’t doing much to reverse the situation,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “Trading values may fall even further.”

Trading volume on Hong Kong’s Hang Seng Index was 17 percent below the 30-day intraday average, while that on the Shanghai Composite Index was 7.8 percent lower, according to data compiled by Bloomberg.

Futures on the S&P 500 swung between gain and losses today. The gauge fell 0.2 percent yesterday, following its biggest weekly advance since June, as U.S. lawmakers prepared to debate the so-called fiscal cliff.

Congress will return from the Thanksgiving recess this week, seeking a budget deal to avoid more than $600 billion of automatic tax increases and spending cuts next year. The Congressional Budget Office has said a failure to avoid the fiscal cliff could lead to a recession and a jobless rate of about 9 percent, compared with the October rate of 7.9 percent.

Greek Deal

In the fourth Greek crisis meeting in two weeks, euro region finance ministers persuaded a skeptical International Monetary Fund that Europe has a formula for rescuing the country that triggered the debt crisis. Greece also was cleared to receive a 34.4 billion euro ($44.7 billion) loan installment in December.

“All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing a meeting that ended early today. “This has been a very difficult deal.”

The MSCI Asia Pacific Index rose 13 percent from this year’s low on June 4 through yesterday as central banks added stimulus to spur economic growth and data showed a slowdown in China may be ending. The gauge traded at 13.9 times estimated earnings, compared with 13.6 times for the S&P 500 Index and 12.4 times for the Stoxx Europe 600 Index.

CSL Soars

CSL soared 6.9 percent to A$50.01 after the drugmaker said earnings after tax in constant-currency terms will climb 20 percent in the year ending June 2013 on higher revenue from its blood products unit and sales of Gardasil cervical cancer vaccine.

Tatts Group climbed 2.8 percent to A$2.91. The company will pay A$427 million ($447 million) for the 40-year gaming contract, which leaves it with control of lotteries in seven of Australia’s eight states and territories. The deal will help lift lottery earnings before interest, tax, depreciation and amortization to more than A$300 million in the year through June 2014, up from A$224 million last year, it said.

Miners Jump

BHP Billiton Ltd. (BHP), the world’s biggest mining company, rose 0.6 percent to A$34.20 and Rio Tinto Group gained 1 percent to A$57.78 in Sydney as copper climbed for a fourth day on the London Metals Exchange.

Hyundai Motor Co. (005380) gained 3.7 percent to 225,000 won and Kia Motors Corp. rose 2.9 percent to 59,500 won in Seoul amid speculation U.S. sales at the Korean carmakers will weather lawsuits tied to overstated mileage claims.

Among stocks that dropped, China Rongsheng Heavy declined 6.7 percent to HK$1.40 and Glorious Property slid 3.2 percent to HK$1.20. Zhang, the founder and biggest shareholder in both businesses, quit their boards about five weeks after another company he controlled agreed to pay $14 million to resolve U.S. inside-trading claims. His departure is unrelated to the claims, iPR Ogilvy in Hong Kong, which handles his public relations, said in an e-mailed reply to questions from Bloomberg News.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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