Asian Stocks Post Weekly Gain as U.S. Rate Concern Eases

Feb. 27 (Bloomberg) -- Asian stocks gained this week, driving up the MSCI Asia Pacific Index by the most in seven weeks as concern eased that the Federal Reserve will raise borrowing costs to curb inflation.

Li & Fung Ltd., which gets 62 percent of sales from the U.S., gained 2.9 percent in Hong Kong as Fed Chairman Ben S. Bernanke said low interest rates are still needed to boost growth. Evergreen Marine Corp., Asia’s largest container- shipping line, surged 11 percent in Taipei after boosting freight rates. Woolworths Ltd., Australia’s biggest retailer, advanced 4 percent in Sydney after reporting higher profit and announcing a share buyback.

“Bernanke stuck to the script and emphasized the Fed’s commitment to maintaining interest rates at low levels until the economic recovery becomes self-sustaining,” said Tim Schroeders, who helps manage about $1.1 billion of equity investments at Pengana Capital Ltd. in Melbourne.

The MSCI Asia Pacific Index gained 2.4 percent to 118.07 this week, the most since the week ended Jan. 8. The gauge has lost 6.9 percent from a 17-month high on Jan. 15 on speculation central banks will start withdrawing stimulus measures. It has risen 1.5 percent this month.

Hong Kong’s Hang Seng Index climbed 3.6 percent this week, the biggest gain in the Asia-Pacific region, as the city’s economic growth beat estimates. Sun Hung Kai Properties Ltd., the world’s biggest developer by market value, surged 7.7 percent after winning a land auction. Japan’s Nikkei 225 Stock Average rose less than 0.1 percent to 10,126.03 as the nation’s exports and factory output increased.

China Index Gains

China’s Shanghai Composite Index increased 1.1 percent, resuming trade after a one-week holiday for the Lunar New Year, as the government said it will extend support for the country’s industries amid weak global demand.

The MSCI Asia Pacific Index surged 34 percent last year as governments worldwide boosted spending and central banks lowered interest rates to help restore economies battered by the global recession. The gauge has fallen about 2.3 percent this year on signs governments from China to the U.S. and India will tighten lending and withdraw stimulus policies.

Bernanke said Feb. 24 that a slack U.S. labor market and low inflation will allow the Federal Open Market Committee to keep the benchmark lending rate low “for an extended period.”

China’s government will continue to expand domestic demand and encourage companies to find new export markets, according to a statement released Feb. 24 after a meeting chaired by Premier Wen Jiabao.

‘Recovery on Track’

Japanese exports climbed at the fastest pace in almost 30 years in January and the country’s factory output increased for the 11th straight month, government reports said this week. Hong Kong’s economic growth beat estimates in the fourth quarter and Financial Secretary John Tsang forecast Feb. 24 an expansion of as much as 5 percent this year.

“All the signs are that the global recovery is on track, but the market is also focusing on the potential for bad news,” said Matt Riordan, who helps manage $4.9 billion at Paradice Investment Management in Sydney.

Li & Fung, a supplier to Wal-Mart Stores Inc., gained 2.9 percent to HK$36.10 in Hong Kong. Esprit Holdings Ltd., the biggest Hong Kong-listed clothier, rose 1.9 percent to HK$55.35 after Citigroup Inc. upgraded the stock to “buy” from “sell.”

Evergreen Marine surged 11 percent to NT$19.2, leading shipping lines higher, after a group of lines said they plan to raise rates for hauling containers to Asia from the U.S.

Woolworths, ANZ

Hong Kong-based Orient Overseas International Ltd. climbed 8.5 percent to HK$56.75 and Singapore’s Neptune Orient Lines Ltd. gained 7.2 percent to S$1.78. Nomura Holdings Inc. recommended investors “buy” shares of the three shipping companies as earnings are expected to recover.

Woolworths climbed 4 percent to A$26.84. The company said yesterday it will buy back A$400 million ($355 million) of stock after reporting an increase in first-half net income.

Australia & New Zealand Banking Group Ltd., Australia’s fourth-biggest lender, gained 5.4 percent to A$23.14 after saying unaudited underlying profit in the four months ended Jan. 31 rose 16 percent.

“Earnings reports have been pretty strong,” said Winson Fong, who helps manage about $2.5 billion at SG Asset Management H.K. Ltd. in Hong Kong. “People are also becoming less panicked about China’s tightening and Europe’s deficit crisis.”

Concern that Greece, Spain and Portugal will struggle to curb deficits have contributed to the MSCI gauge’s drop this year. Standard & Poor’s and Moody’s Investors Services said this week Greece’s credit rating may be lowered.

Utilities, Developers

A gauge of utilities companies posted the biggest gain of the MSCI Asia Pacific Index’s 10 industry group this week. Japan’s Chugoku Electric Power Co. rose 5.8 percent to 1,855 yen and New Zealand’s Contact Energy Ltd. climbed 7.4 percent to NZ$6.12 as investors sought haven from risks.

Sun Hung Kai Properties jumped 7.7 percent to HK$107.80. The company won Hong Kong’s first land auction of the year with a bid that exceeded most analysts’ estimates after selling 900 homes last weekend.

In Singapore, City Developments Ltd. dropped 5.2 percent to S$10.28 after the city-state moved to curb speculation in the property market by imposing a levy on sales of residential properties within a year from the date of purchase.