Tuesday, February 26, 2008

Asian Stocks Rise After Bond Insurers Keep Ratings; Banks Gain

Asian stocks rose to their highest in three weeks, led by financial companies, after the world's largest bond insurers retained top credit ratings, easing concern that global economic growth will slow on new credit losses. Mitsubishi UFJ Financial Group Inc. climbed after Standard & Poor's kept MBIA Inc. and Ambac Financial Group Inc.'s AAA debt ratings. Sun Hung Kai Properties Ltd. paced gains in Hong Kong on speculation the city's record budget surplus will prompt the government to waive property taxes. Posco led steelmakers higher after HSBC Holdings Plc said the alloy's price will rise. ``It's a temporary boost for Asia,'' said Mushtaq Ibrahim, who manages about $1.4 billion at Amanah SSCM Asset Management Bhd. S&P's move ``has prevented a snowballing effect that would have dragged down banks'' globally. The MSCI Asia Pacific Index added 0.7 percent to 146.50 as of 1:44 p.m. in Tokyo, poised for its highest close since Feb. 5. Gains today helped trim the benchmark's 2008 loss to 7 percent. Japan's Nikkei 225 Stock Average climbed 0.3 percent to 13,958.80. Australia's S&P/ASX 200 rose 0.8 percent. Woolworths Ltd., the nation's biggest retailer, rose to a one-month high after reporting increased profit. Auckland International Airport Ltd. fell by a record in Wellington trading on speculation a Canadian pension fund's takeover offer will fail after a tax loophole was closed and the city's mayor rejected the proposal. U.S. stocks climbed yesterday, helping the Standard & Poor's 500 Index to its biggest rally this month. MBIA, Ambac Mitsubishi UFJ, Japan's largest publicly traded bank, advanced 2 percent to 994 yen. Mizuho Financial Group Inc., the third-largest by market value, jumped 2.9 percent to 465,000 yen. National Australia Bank Ltd., the country's largest, climbed 2.5 percent to A$29.85. MBIA is no longer under review for a downgrade by S&P, indicating the bond insurer is a step further away from losing its AAA insurance credit rating. Ambac, which ranks second to MBIA among bond insurers, is still being reviewed for a possible downgrade, the ratings agency said. ``S&P's move doesn't fix the problem completely, but it does buy some time to find solutions,'' said Yoshinori Nagano, who helps oversee about $70 billion at Daiwa Asset Management Co. in Tokyo. Real-estate stocks climbed in Japan on speculation developers will be able to finance projects as the credit squeeze eases. The Topix Real Estate Index, which plunged 20 percent in the past three months and was the worst performer among the broader index's 33 industry groups, jumped 3.7 percent today. Mitsubishi Estate Co., Japan's biggest developer by market value, surged 5.6 percent to 2,725 yen. Mitsui Fudosan Co., the second-largest, added 5.1 percent to 2,260 yen. Sun Hung Kai, Posco Sun Hung Kai, Hong Kong's No. 1 developer by market value, advanced 2.9 percent to HK$134.20, halting a four-day, 6.9 percent retreat. Cheung Kong (Holdings) Ltd., the second biggest, rose 2.4 percent to HK$114.70. Hong Kong will probably report a record budget surplus of HK$113 billion ($14.5 billion) for the year ended March 31, according to the median estimate in a Bloomberg News survey of analysts. The government may waive property taxes for the full financial year, PricewaterhouseCoopers LLP predicted. Financial Secretary John Tsang is due to deliver his maiden budget speech tomorrow. In South Korea, Posco advanced 3.7 percent to 533,000 won. Asia's third-largest steelmaker is ``very likely'' to raise prices for its products as early as March, Hyundai Securities Co. said in a report. `Exploding' Steel Prices ``Regional steel prices are exploding, driven by a powerful mix of surging costs and a steel shortage,'' HSBC analysts including Daniel Kang wrote in a report. ``We expect this shortage to continue into the second quarter, driving further price hikes as mills look to recover massive cost increases.'' China Steel Corp., Taiwan's biggest steelmaker, added 3.6 percent to NT$47.25. JFE Holdings Inc., the world's third-largest steelmaker, advanced 1.5 percent to 4,800 yen. Woolworths gained 5.5 percent to A$30.59, poised for the highest close since Jan. 29. First-half profit rose 28 percent after the Australian retailer won market share, cut costs to supply its supermarkets and added more profitable groceries. Also in Australia, ABC Learning Centres Ltd. plunged 51 percent to A$1.83, the biggest slump by percentage on MSCI's Asian index, on concern the world's biggest publicly traded owner of child-care centers will struggle to repay debt. QBE Insurance Group Ltd. slumped 9.8 percent to A$25.85, poised for the biggest decline since Dec. 8, 2006, after Australia's biggest property and casualty insurer reported net income that missed analyst estimates in a Bloomberg survey. Auckland Airport fell 13 percent to NZ$2.45 after Mayor John Banks said his city, the largest holder, won't support Canada Pension Plan Investment Board's offer and the government removed a tax deduction the fund manager had planned to use to recapitalize its investment. Bloomberg.

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