Asian Stocks Snap 3-Week Losing Streak on Financial Policies

Jan. 30 (Bloomberg) -- Asian stocks climbed for the first week in four, led by banks, as the U.S. and Japan stepped up efforts to revive credit markets and economic growth.

Sumitomo Mitsui Financial Group Inc., Japan’s second- largest bank by market value, jumped 14 percent after the government proposed equity financing for companies short of funding. KB Financial Group Inc. rallied 16 percent in Seoul as the U.S. moved closer to creating a bank to absorb toxic assets. Samsung Electronics Co., the world’s biggest computer-memory maker, gained 10 percent after the bankruptcy of a rival lifted confidence a chip supply glut will ease.

“Thanks to once-in-a-century measures from governments worldwide, the global economy will likely be better next year than this year,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $96 billion. “The market is starting to reflect that possible recovery.”

The MSCI Asia Pacific Index rose 3.5 percent this week to 82.12, climbing from a seven-week low. The gauge lost 7.1 percent in January, trailing only 2008 as the worst start to a new year in its two-decade history.

Japan’s Nikkei 225 Stock Average rose 3.2 percent. Most of the region’s markets were closed for part of the week for Lunar New Year. China’s markets will reopen on Feb. 2.

MSCI’s Asian index slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits. Earnings estimates for companies included in the gauge dropped 43 percent in the past year, bringing them to the lowest level since Bloomberg began compiling the data in 2005.

Financials Rally

An index of financial companies on MSCI Asia Pacific rose 5.9 percent, the second-largest advance of 10 industry groups, amid speculation policy measures will help ease a crisis that has caused more than $1 trillion of losses at financial institutions worldwide.

Sumitomo Mitsui gained 14 percent to 3,650 yen even as it reported a 99 percent slump in third-quarter profit. KB, which controls South Korea’s largest bank, climbed 16 percent to 37,000 won. Commonwealth Bank of Australia, the　nation’s largest mortgage lender, added 12 percent to A$26.90.

In Japan, the government proposed allowing the Development Bank of Japan to buy preferred and common shares in companies, aiding the ones that have difficulty obtaining capital, while the Bank of Japan pledged to purchase corporate debt to help ease credit markets.

Government Support

Parliament passed a 4.8 trillion yen ($53.9 billion) stimulus plan that includes cash handouts to individuals and support for laid-off workers.

In the U.S., President Barack Obama’s administration may announce next week the outlines of a plan to create a “bad” bank that will acquire unwanted assets from financial institutions and allow the government to rewrite the terms of some mortgages, a White House official said.

Additionally, the lower house of the U.S. Congress approved Obama’s $819 billion economic stimulus package, moving it to the Senate for final approval.

Samsung jumped 10 percent to 488,000 won and Elpida Memory Inc., Japan’s largest memory chipmaker, soared 27 percent to 649 yen after Qimonda AG, a German chipmaking rival that accounted for 5 percent of global production, filed for insolvency.

Oversupply in the industry helped push prices for chips down 42 percent in the last quarter of 2008, according to industry research firm DRAMeXchange.

Earnings Reports

Disappointing earnings figures capped gains this week. Toshiba Corp., the world’s second-biggest maker of flash memory chips, lost 14 percent to 318 yen after saying it expects a record loss this year because of falling prices for chips.

India’s Glenmark Pharmaceuticals Ltd. plunged 32.6 percent to 137.25 rupees, the steepest drop in the MSCI Asia gauge, after third-quarter profit tumbled 71 percent.

Boral Ltd., Australia’s biggest seller of building materials, dropped 17 percent to A$3.31 as the ongoing global housing slump forced the company to reduce its annual net income forecast by 40 percent.

“The recession is going to be deeper than what we read to be the consensus,” said Alistair Thompson, who helps manage about $16 billion in equities at First State Investments in Singapore. “People are saying there’s going to be a recovery toward the end of the year, but the credit binge we’ve had is going to take an awful lot longer to unwind.”