Asian Stocks Rise on Bond Insurer Rescue Plan; Financials Jump:
February, 25, 2008-- Asian stocks rose, led by financial companies, on speculation a plan to help U.S. bond insurers keep their credit ratings will limit further losses related to subprime-mortgage d
efaults.
National Australia Bank Ltd., the nation's No. 1 bank by assets, rose for the first time in four days. Aioi Insurance Co., a Japanese casualty insurer, was the biggest gainer on the MSCI Asia Pacific Index after forecasting a smaller-than-expected loss. Inpex Holdings Inc. advanced after the London-based Times newspaper said a Chinese state fund may buy a stake.
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.''
The MSCI Asian index added 1.3 percent to 145.57 at 1:39 p.m. in Tokyo, following a 0.8 percent retreat last week. All 10 of the benchmark's industry groups advanced, with a measure of financial stocks contributing the most to the index's gain.
Japan's Nikkei 225 Stock Average climbed 2.1 percent to 13,778.23. Indexes also rose 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.
National Australia climbed 1.5 percent to A$29.02, halting a three-day, 6.1 percent retreat. HSBC Holdings Plc, Europe's largest bank by assets, rose 1.8 percent to HK$116.70 in Hong Kong. The company generated 31 percent of its revenue in 2006 from North America.
Ambac's Rescue:
Ambac Financial Group Inc., the world's second-biggest bond insurer, may receive $3 billion as part of a rescue agreement with banks, 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.
``A rescue plan for bond guarantors is currently the center of attention,'' Koichi Takatsuka, a fund manager at Tokyo-based United Investments Co., said in an interview with Bloomberg Television. Bank-related stocks will get a boost, he said.
Aioi Insurance surged 17 percent to 524 yen after the company forecast a full-year net loss of 4 billion yen ($37.3 million), narrower than the 5 billion yen loss reported by Nikkei English News last week.
Millea Holdings Inc., Japan's biggest insurer, rose 8.1 percent to 4,000 yen, poised for its largest advance since Jan. 24. Mitsui Sumitomo Insurance Co., Japan's second-biggest property and casualty insurer, gained 11 percent to 1,111 yen.
Inpex Rallies:
Inpex, Japan's largest oil and gas explorer, added 6.1 percent to 1.21 million yen, set for 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 Times 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 longest losing streak since November, on speculation new shares will dilute existing holdings and after the central bank said it will keep ordering banks to set aside more reserves.
Chinese Banks, Allco Finance:
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 1.4 percent to 29.93 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 1.3 percent to 39.45 yuan, adding to a three-day, 22 percent slump.
Meanwhile, Allco Finance Group Ltd. plunged 62 percent to A$1.155 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.
efaults.
National Australia Bank Ltd., the nation's No. 1 bank by assets, rose for the first time in four days. Aioi Insurance Co., a Japanese casualty insurer, was the biggest gainer on the MSCI Asia Pacific Index after forecasting a smaller-than-expected loss. Inpex Holdings Inc. advanced after the London-based Times newspaper said a Chinese state fund may buy a stake.
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.''
The MSCI Asian index added 1.3 percent to 145.57 at 1:39 p.m. in Tokyo, following a 0.8 percent retreat last week. All 10 of the benchmark's industry groups advanced, with a measure of financial stocks contributing the most to the index's gain.
Japan's Nikkei 225 Stock Average climbed 2.1 percent to 13,778.23. Indexes also rose 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.
National Australia climbed 1.5 percent to A$29.02, halting a three-day, 6.1 percent retreat. HSBC Holdings Plc, Europe's largest bank by assets, rose 1.8 percent to HK$116.70 in Hong Kong. The company generated 31 percent of its revenue in 2006 from North America.
Ambac's Rescue:
Ambac Financial Group Inc., the world's second-biggest bond insurer, may receive $3 billion as part of a rescue agreement with banks, 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.
``A rescue plan for bond guarantors is currently the center of attention,'' Koichi Takatsuka, a fund manager at Tokyo-based United Investments Co., said in an interview with Bloomberg Television. Bank-related stocks will get a boost, he said.
Aioi Insurance surged 17 percent to 524 yen after the company forecast a full-year net loss of 4 billion yen ($37.3 million), narrower than the 5 billion yen loss reported by Nikkei English News last week.
Millea Holdings Inc., Japan's biggest insurer, rose 8.1 percent to 4,000 yen, poised for its largest advance since Jan. 24. Mitsui Sumitomo Insurance Co., Japan's second-biggest property and casualty insurer, gained 11 percent to 1,111 yen.
Inpex Rallies:
Inpex, Japan's largest oil and gas explorer, added 6.1 percent to 1.21 million yen, set for 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 Times 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 longest losing streak since November, on speculation new shares will dilute existing holdings and after the central bank said it will keep ordering banks to set aside more reserves.
Chinese Banks, Allco Finance:
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 1.4 percent to 29.93 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 1.3 percent to 39.45 yuan, adding to a three-day, 22 percent slump.
Meanwhile, Allco Finance Group Ltd. plunged 62 percent to A$1.155 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.
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