Asian Stocks Rise on Bond Insurer Rescue Plan; Financials Jump http://www.bloomberg.com/apps/news?pid=20601087&sid=ahgfW4vUX2Ok&refer=home
By Chen Shiyin and Toshiro Hasegawa
Feb. 25 (Bloomberg) -- Asian stocks rose, led by financial companies and electronics exporters, on speculation U.S. banks will prevent subprime losses from further infecting credit markets and slowing global economic growth.
Millea Holdings Inc., Japan's biggest insurer, and Commonwealth Bank of Australia led gains on optimism banks will give Ambac Financial Group Inc. $3 billion of capital to retain its AAA rating. Matsushita Electric Industrial Co. and Canon Inc. paced technology companies higher. All 10 of the MSCI Asia- Pacific Index's industry groups advanced.
The rescue plan ``boosts investors' confidence a chain reaction of subprime losses will be averted,'' said Yoshihiro Okumura, who helps oversee the equivalent of $365 million at Chiba-gin Asset Management Co. ``Actual losses at Japan's insurance companies are smaller than overseas counterparts, which encourages investors to pile back in to their shares.''
MSCI's Asian index added 1.6 percent to 145.93 at 3:58 p.m. in Tokyo, following a 0.8 percent retreat last week. The benchmark has rallied 10 percent since reaching a 14-month-low on Jan. 22 as concern eased that the U.S. housing slump was dragging the economy into a recession.
Japan's Nikkei 225 Stock Average climbed 3.1 percent to 13,914.57, the highest close since Jan. 15 and Asia's biggest increase. Indexes advanced elsewhere in the region, except China. The Philippines is closed for a holiday.
U.S. stocks rallied in the final 30 minutes of trading on Feb. 22, helping the Standard & Poor's 500 Index add 0.8 percent.
Millea jumped 8.9 percent to 4,030 yen, its largest advance since Oct. 2. Commonwealth Bank, Australia's biggest mortgage lender, rose 4.9 percent to A$44.67. HSBC Holdings Plc, Europe's largest bank by assets, rose 1.8 percent to HK$116.70 in Hong Kong.
Ambac Financial Group Inc., the world's second-biggest bond insurer, may receive $3 billion as part of a rescue agreement with banks to help it keep its rating, according to a person with knowledge of the discussions. A credit downgrade would trigger another round of writedowns on municipal and asset-backed securities among financial institutions.
Aioi Insurance Co., a Japanese casualty insurer, surged 14 percent to 513 yen, the biggest gainer by percentage on the MSCI Asian index. The company forecast a full-year net loss of 4 billion yen ($37.3 million) that was narrower than the 5 billion yen loss reported by Nikkei English News last week.
`A Sensible Solution'
Matsushita Electric, the world's largest consumer electronics maker, advanced 2.9 percent to 2,275 yen. Canon, the biggest digital-camera maker, climbed 2.7 percent to 4,990 yen. Hon Hai Precision Industry Co., the No. 1 contract manufacturer of consumer electronics, added 4.1 percent to NT$190.50.
``We are getting closer to the real problem and a sensible solution,'' said Winson Fong, who helps manages about $600 million at SG Asset Management in Hong Kong. ``Asia is still going to be growing faster than the G7 economies. The market has been overly pessimistic.''
Technology shares also climbed after the Nikkei newspaper said Sharp Corp. is poised to win liquid-crystal display television panel orders from Sony Corp.
Sharp, Japan's biggest maker of LCDs, rose 5.2 percent to 2,100 yen. Sony plans to buy LCDs from Sharp as early as next fiscal year, the Nikkei reported. Spokesmen at both companies declined to comment on the report. Sony climbed 2.4 percent to 5,140 yen.
Inpex, Chinese Banks
Inpex Holdings Inc., Japan's largest oil and gas explorer, added 7.9 percent to 1.23 million yen, its highest close since Jan. 9. China Investment Corp. is planning to spend $10 billion in Japan and may purchase a ``sizable stake'' in Inpex, the London-based Times newspaper reported on Feb. 23, citing a person inside the Japanese government that it didn't name.
Japanese stocks also climbed after the China Banking Regulatory Commission said commercial banks will be allowed to invest in Japanese shares and funds under the so-called qualified domestic institutional investor program.
Chinese stocks fell for a fourth day, sending the CSI 300 Index to its lowest since Aug. 2, on speculation new shares will dilute existing holdings and after the central bank said it will keep ordering banks to set aside more reserves.
The People's Bank of China said it will ``vigorously'' reduce money supply by raising the reserve ratio, which erodes profit by restricting funds available for loans.
China Merchant Bank Co. lost 1.5 percent to 29.91 yuan, set for the lowest since Aug. 1, on concern the ending of a two-year share lock-up this week will spark a sell-off by investors. Shanghai Pudong Development Bank Co., which said last week it plans to sell new shares to the public, slipped 1.6 percent to 39.36 yuan, adding to a three-day, 22 percent slump.
Allco Finance, Gamuda Plunge
Meanwhile, Allco Finance Group Ltd. plunged 64 percent to A$1.11 after saying lenders may force it to repay A$1.15 billion ($1 billion) of debt in the next three months.
The Australian asset manager has A$250 million of debt due May 1 and another A$900 million it could be called on to repay within 90 days, Chief Executive Officer David Clarke said today. The company is in discussions to sell ``non core assets,'' without providing details.
Gamuda Bhd., Malaysia's second-largest builder, slumped 15 percent to 3.34 ringgit, the biggest decliner on the MSCI Asian index. The shares have plunged 33 percent since Managing Director Lin Yun Ling, who has helmed Gamuda for 27 years, cut his holdings in the company.