| Asian stocks, US futures advance | |
| Bloomberg / Mumbai December 11, 2008, 0:47 IST | |
GM, Chrysler bailout plan may boost global economy.
Asian stocks advanced for a fourth day and US index futures gained on speculation lawmakers will approve a $15 billion bailout of American auto companies, the latest government effort to bolster the global economy.
Honda Motor Co. and Hyundai Motor Co. surged more than 9 percent as lawmakers reached a tentative agreement to rescue General Motors Corp. and Chrysler LLC that would protect jobs and parts suppliers. BHP Billiton Ltd., the world’s largest mining company, added 6.7 percent as oil and copper climbed. Mitsui O.S.K. Lines Ltd. jumped 10 percent in Tokyo after shipping costs advanced. An increase in Australian consumer confidence drove Westfield Group, the shopping mall operator, 3.5 percent higher.
The MSCI Asia Pacific Index rose 3.3 percent to 86.43 in Tokyo. The measure has gained 15 percent since November 20, when it reached a five-year low, as governments from Australia to the US. announced measures to combat the worst financial crisis since the Great Depression. Futures on the Standard & Poor’s 500 Index added 1.3 percent.
"There’s a lot of hope that all these stimulus plans will help revive growth to a large extent," said Raymond Tang, who oversees $5.8 billion as chief investment officer at CIMB- Principal Asset Management Bhd. If US carmakers fail "that’s a risk to the economy and will have huge knock-on effects in Asia overall," Tang said.
MSCI’s Asian index has lost 45 percent this year as Japan, the US and Europe entered recessions. Companies on the index are valued at an average 12.4 times estimated profit, about a quarter less than the level at the start of 2008.
Worsening demand for metals led Rio Tinto Group, the world’s third-largest mining company, to say it will cut 14,000 jobs and reduce spending by $5 billion next year. The stock surged 12 percent in Sydney ahead of the news, which was announced after the close of trading.
Japan’s Nikkei 225 Stock Average advanced 3.2 percent to 8,660.24. Tokyu Land Corp. rallied after the Nikkei newspaper said the government may provide credit to struggling developers. All other benchmark indexes increased apart from New Zealand.
US Congressional Democrats and White House negotiators agreed on the outlines of the $15 billion plan to give GM and Chrysler federal loans while requiring them to restructure their operations. GM and Chrysler have said they need at least $14 billion in combined aid to keep from running out of cash.
“That’s the best result we wanted to hear,” said Choi Dae Sik, a Seoul-based analyst at HI Investment & Securities Co. The collapse of US carmakers could cause “a catastrophe in the real economy and in auto demand,” the analyst said.
Honda Motor rose 10.3 percent to 2,035 yen. Hyundai Motor, South Korea’s largest automaker, gained 9.2 percent to 47,050 won. Averting a collapse would also help protect suppliers from Johnson Controls Inc. to Lear Corp. that serve Asian carmakers.
International trade will shrink in 2009 for the first time in more than 25 years as economic growth slows and commodity prices slide, the World Bank said. Global growth will slow to 0.9 percent, or the weakest rate since records began in 1970, the institution said.
The deepening global recession drove Japanese machinery orders down 4.4 percent in October from September, a report today showed, more than economists surveyed by Bloomberg News predicted.
Sony Corp., the world’s second-largest consumer electronics maker, added 1.1 percent to 2,770 after saying it will cut 16,000 jobs due to slowing economic growth.
Commonwealth Bank of Australia and Westpac Banking Corp. slumped in Sydney after raising capital to boost balance sheets dented by rising defaults. Globally, financial companies have raised almost $890 billion since the credit crisis began last year as losses grew to almost $1 trillion.
Commonwealth, the nation’s second-biggest bank by market value, lost 5 percent to A$28.50 after saying it will sell up to A$750 million ($495 million) in stock to Merrill Lynch Westpac, the biggest, sold A$2.5 billion in stock and $1.5 billion of notes, sending its shares 8.5 percent lower to A$16.37.
Raw-material makers gained after crude rose 1.8 percent to $42.84. Oil was boosted after traders bought contracts to close out bets that prices will fall. Copper climbed 0.7 percent on the London Metal Exchange to $3,223 a metric ton yesterday. BHP, Australia’s biggest oil producer, advanced 6.7 per cent to A$30.36. Cnooc Ltd., China’s largest offshore oil explorer, added 10 per cent to HK$7.27.
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