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Asian Stocks Head for Nine-Month High on U.S. Budget

By Yoshiaki Nohara
December 18, 2012 5:49 AM EST 1 Comments
Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan.
Photographer: Tomohiro Ohsumi/Bloomberg
Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan.

Asian stocks rose, with the regional benchmark index headed for the highest close since March, as U.S. President Barack Obama made concessions in negotiations to break the budget impasse, according to a person familiar with the talks.

Samsung Electronics Co. (005930), which depends on America for a fifth of its revenue, rose 0.8 percent in Seoul after Apple Inc.’s bid to ban its rival’s products in the U.S. was denied. Mitsubishi UFJ Financial Group Inc. (8306) rose 3.8 percent, pacing gains among Japanese banks on prospects the nation’s central bank may ease monetary policy further. Tokyo Electric Power Co. (9501) surged 17 percent after jumping 33 percent yesterday on speculation Japan’s new political leadership may allow nuclear reactors to restart.

The MSCI Asia Pacific Index gained 0.5 percent to 127.95 as of 7:46 p.m. in Tokyo, headed for its highest close since March 27. About six shares advanced for every four that fell on the measure. Obama is negotiating with lawmakers to head off the so- called fiscal cliff, more than $600 billion in automatic spending cuts and tax increases due in January.

On U.S. budget talks, “we are now getting some signs at least that negotiations are continuing, and that is a positive development,” saidBelinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “There’s a view that the Bank of Japan will become a little more aggressive in terms of asset purchases and really trying to depreciate the yen, so that could certainly help the Japanese market particular.”

Relative Value

Asia’s benchmark equities index rose 12 percent this year as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.5 times average estimated earnings, compared with 13.8 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japan’s Nikkei 225 Stock Average advanced 1 percent, extending an eight-month high, while the broader Topix Index climbed 1.1 percent.

The MSCI Asia Pacific excluding Japan Index added 0.2 percent. Australia’s S&P/ASX 200 rose 0.5 percent as minutes of the central bank’s Dec. 4 meeting showed it cut interest rates as a softer labor market gave it room to implement measures to bolster demand. New Zealand’s NZX 50 Index increased 0.3 percent. South Korea’s Kospi Index added 0.5 percent.

China’s Shanghai Composite Index gained 0.1 percent after rising as much as 1.1 percent. The nation’s foreign trade will improve next year, while the 2012 trade surplus will be “much bigger” than in 2011, the commerce ministry said. Hong Kong’s Hang Seng Index lost 0.1 percent and Taiwan’s Taiex Index rose 0.2 percent.

Singapore’s Straits Times Index slipped 0.1 percent. A gauge of smaller companies listed in the city-state increased for a 23rd day, extending its longest-ever streak of gains.

Budget Offer

Futures on the S&P 500 advanced 0.3 percent today. The gauge surged 1.2 percent to a two-month high yesterday as there appeared to be progress on U.S. budget negotiations.

Obama made a new offer that would raise taxes by $1.2 trillion and increase tax rates for households earning more than $400,000 a year, up from $250,000, said a person familiar with the talks. Obama and House Speaker John Boehner are negotiating to avert the budget impasse.

Exporters to the U.S. gained, with Samsung adding 0.8 percent to 1.515 million won. The stock also rose after a U.S. judge rejected Apple’s attempt to ban Samsung products after a jury in August found infringement of the iPhone maker’s patents. James Hardie Industries SE (JHX), a building-materials supplier that gets 67 percent of sales from the U.S., added 0.7 percent to A$9.01 in Sydney. Toyota Motor Corp. (7203), which gets a quarter of its sales in North America, advanced 2.8 percent to 3,720 yen. A gauge of consumer discretionary companies in the Asia-Pacific Index climbed 0.7 percent.

Easing Expectations

Japanese shares extended yesterday’s gains after the Liberal Democratic Party, which has called for more aggressive monetary policy easing, reclaimed power in a weekend election. The Bank of Japan is scheduled to start a two-day meeting tomorrow.

Banks rose in Tokyo, with Mitsubishi UFJ advancing 3.8 percent to 410 yen. Mizuho Financial Group Inc. (8411), Japan’s third- largest bank by market value, climbed 2.9 percent to 141 yen. Resona Holdings Inc. gained 4 percent to 361 yen.

Tokyo Electric Power gained 17 percent to 237 yen, bucking losses among other utilities. Tohoku Electric Power Co. dropped 6.9 percent to 798 yen after surging 15 percent yesterday. Kansai Electric Power Co. dropped 4.5 percent to 879 yen, following an 18 percent rally yesterday.

Sharp Climbs

Sharp Corp. jumped 8.6 percent to 327 yen in Tokyo as concerns the TV maker can’t pay its debts eased. The TV maker, which said last month there was “material doubt” about its ability to survive, reached an agreement this month to sell as much as 9.9 billion yen ($118 million) of shares to San Diego- based Qualcomm Inc. Sharp has added 60 percent since Dec. 10.

Among stocks that fell, Korea Aerospace Industries Ltd. (047810) dropped 3.2 percent to 25,850 won in Seoul after shareholders abandoned the sale of a $1 billion controlling stake in the company when they failed to get enough bids.

AIA Group Ltd. dropped 3.3 percent to HK$30.60 in Hong Kong after American International Group Inc. announced the sale of its remaining stake in the company.

To contact the reporter on this story: 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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