Asia Stocks Rise Second Week for Biggest Annual Gain Since 1993

Jan. 2 (Bloomberg) -- Asian stocks rose for the second week, capping the MSCI Asia Pacific Index’s biggest annual gain since 2003, after China raised its economic growth figures and Japan said industrial production increased. Hitachi Ltd., Japan’s fourth-largest company by sales, added 4 percent. Suning Appliance Co., China’s biggest home- appliance retailer by market value, climbed 5.9 percent. Korea Electric Power Corp. jumped 4.1 percent in Seoul after leading a group that won the United Arab Emirates’ first order for a nuclear-power plant.

“The global economy is just about bottoming out,” said Masaru Hamasaki, chief strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “I don’t expect huge economic growth, but I do see things recovering.”

The MSCI Asia Pacific Index rose 0.7 percent to 120.45 in a holiday-shortened week. The gauge climbed 34 percent in 2009, its biggest annual gain since 2003, on signs government spending and lower interest rates are bolstering economies.

Japan’s Nikkei 225 Stock Average rose 0.5 percent in the country’s three-day trading week, after factory output increased in November from October and the government said on Dec. 25 that gross domestic product will probably expand 1.4 percent in the year starting April 1.

The Nikkei 225 has plunged 73 percent since it climbed to an intraday record of 38,957.44 on the final business day of 1989, the world’s worst performer in the period. Japan’s broader Topix index rose 5.6 percent this year, the lowest return among benchmark equity gauges for the world’s 10 largest markets.

Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 Index both climbed 1.7 percent this week.

Growth Estimate

The Shanghai Composite Index advanced 4.3 percent this week as China raised its 2008 growth estimate to 9.6 percent from 9 percent on Dec. 25, and said 2009’s quarterly figures will also increase.

Japan’s Cabinet Office said Dec. 25 that the economy will expand for the first time in three years, while the Trade Ministry said on Dec. 28 factory output increased 2.6 percent in November from October. The median estimate of 24 economists surveyed by Bloomberg News was for a 2.5 percent gain.

Hitachi climbed 4 percent to 284 yen. The maker of washing machines and nuclear reactors will sign a contract valued at as much as 1 trillion yen ($11 billion) early in 2010 for a high- speed train project in the U.K., the Sankei newspaper reported, without citing anyone.

Consumer Stocks

Suning Appliance Co., China’s biggest home appliance retailer by market value, added 5.6 percent to 20.78 yuan. GD Midea Holding Co., the nation’s second-biggest publicly traded appliance maker, gained 2.4 percent to 23.30 yuan.

“Consumer stocks are good bets as they will receive most of the government support next year,” Wei Wei, an analyst at West China Securities Co. in Shanghai, said Dec. 28. Central bank Governor Zhou Xiaochuan said on Dec. 31 the People’s Bank of China will maintain a “moderately loose” monetary policy.

The Shanghai Composite Index rallied 80 percent in 2009 as government spending and a credit boom helped the nation’s economy recover from its steepest slump in more than a decade.

Korea Electric jumped 4.1 percent to 34,100 won in Seoul. Its partners in the nuclear-power bid also gained, with Doosan Heavy Industries & Construction Co. soaring 9.7 percent to 81,100 won and Hyundai Engineering & Construction Co. climbing 4.3 percent to 70,900 won.

“We will probably start to see more business deals like this one, bit by bit,” said Toyota Asset Management’s Hamasaki.

The MSCI Asia Pacific Index’s 2009 advance has outpaced gains of 23 percent by the S&P 500 in the U.S. and 28 percent for the Dow Jones Stoxx 600 Index in Europe. Stocks in the MSCI gauge trade at an average of 23 times estimated earnings, compared with 18 times for the Standard and Poor’s 500 Index in the U.S. and 16 times for the Dow Jones Stoxx 600 Index in Europe.

Global Rally

The 2009 gain in Asian stocks is part of a global rally that has boosted the MSCI World Index by 27 percent, the steepest increase since 2003. The gauge plunged 42 percent in 2008, the most since inception 40 years ago, as mounting losses from the collapse of the U.S. subprime mortgage market and the bankruptcy of Lehman Brothers Holdings Inc. led investors to exit equities.

In October, the International Monetary Fund estimated global growth of 3.1 percent in 2010, compared with an estimated 1.1 percent contraction in 2009.

“Investors are generally a lot more relaxed right now,” Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney, said Dec. 31. “The sixty-four- million dollar question is: what happens next year where we could have a much stronger economic backdrop but tighter liquidity conditions? Markets may well end up consolidating gains in 2010 rather than making another big move upwards.”

Among stocks that fell in the week were Japan Airlines Corp. and Asiana Airlines Inc., both of which plunged on debt concerns.

Japan Airlines, Asia’s biggest carrier by sales, tumbled 31 percent to 67 yen, the lowest close since the stock began trading in 2002, on speculation it will file for bankruptcy. Asiana Airlines lost 13 percent to 3,645 won in Seoul after the carrier’s parent said it may restructure debt at affiliates.