Asia 18 June 2012

Asian stocks jumping overnight (MSCI Asia Pacific increasing 1.7%) as gains by pro-bailout parties in Greek elections eased concern the nation would leave the Euro.

Stocks also climbing as China's central bank predicted the nation will rebound in the next quarter.

Commodities on the up seeing Oil gain 1.9% and Copper add 1.4%.


"June 18 (Bloomberg) -- Asian stocks and the euro rose to the highest levels in a month as gains by pro-bailout parties in Greek elections eased concern the nation would be forced out of the 17-member currency bloc. Commodities advanced while bond risk in Asia declined.

The MSCI Asia Pacific Index climbed 1.7 percent to the highest since May 16 at 12:39 p.m. in Tokyo. The euro strengthened 0.5 percent to the highest since May 22, and the yen fell against most of its major counterparts. The Standard & Poor’s GSCI Index of 24 commodities gained 0.8 percent while bond risk in Asia dropped to the lowest since May 8. S&P 500 Index futures added 0.5 percent.

The New Democracy and Pasok parties won enough seats to form a majority in the 300-member parliament, according to an official projection, easing concern that Greece would reject austerity measures needed to qualify for international aid. Stocks also rose as China’s central bank predicted the world’s second biggest economy will rebound next quarter and President Hu Jintao told Mexico’s Reforma newspaper that the nation would maintain “stable” growth.

“The market will breathe a sigh of relief,” Todd Lowenstein, who helps oversee about $17 billion for Highmark Capital Management Inc. in Los Angeles, said in a phone interview. “The results of the Greek election took a negative off the table versus this being a big positive. At the end of the day, there are still structural issues and imbalances that need to be corrected and dealt with.”

G-20 Meets

The vote forced Greeks, in a fifth year of recession, to choose open-ended austerity to stay in the euro or reject the terms of a bailout and risk the turmoil of exiting the 17-nation currency. European governments indicated a willingness to relent on Greece’s austerity measures. The new government must emerge “swiftly” from the contest, euro finance ministers said in a statement on June 17.

Greece’s international monitors will “return to Athens as soon as a new government is in place to exchange views with the new government on the way forward,” euro-area finance ministers said in the e-mailed statement.

Leaders from the Group of 20 nations will boost the $430 billion firewall the International Monetary Fund announced in April, host President Felipe Calderon said.

Trillions Lost

More than $5 trillion has been erased from stock prices around the world since March, with benchmark indexes in Brazil, Russia and Italy falling into bear markets, or losses of 20 percent or more from recent peaks.

The MSCI Asia-Pacific Index has lost 11 percent from this year’s highest level in February. About seven shares rose for each that fell in the gauge. Hong Kong Exchanges & Clearing Ltd., the world’s second-largest bourse operator, slipped 3 percent after agreeing to pay 1.39 billion pounds ($2.18 billion) for the London Metal Exchange.

Lynas Corp. surged 9.9 percent in Sydney after Malaysia rejected an appeal by local residents to cancel the Australian miner’s license to run a rare-earths refining facility in the Southeast Asian nation. Fairfax Media Ltd., Australia’s second- largest newspaper publisher, jumped 7.9 percent as it plans to cut 22 percent of its workforce, close printing sites and introduce digital subscriptions to halt sliding sales.

The Shanghai Composite Index rose 0.7 percent. China’s economy will bottom out this quarter and rebound in the following three months as government measures to stabilize a slowdown take effect, an academic adviser to the nation’s central bank said at a June 16 forum in Beijing.

Fed Meeting

The MSCI All-Country World Index rose 1.7 last week, gaining for a second straight week, amid speculation central banks will increase measures to stimulate growth in economies threatened by Europe’s debt crisis.

“There’s a short-term sigh of relief,” said Belinda Allen, Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “The medium term is still challenging. And we’ve got the Federal Reserve meeting this week. Markets will turn their attention to what the Fed is going to say. They’ve certainly been suggesting that they can do more. Whether or not they’re willing to do it now is the big question.”

Reports on U.S. industrial production, jobless claims and consumer confidence last week trailed projections, fueling expectations that the central bank will take more steps to boost the economy when it meets for two days from June 19.

Commodities Gain
The S&P GSCI index rose for a third day as oil in New York advanced as much as 1.9 percent to $85.60 a barrel, the highest intraday price since June 11, while copper in London gained as much as 1.4 percent to the highest in more than two weeks. Gold fell 0.3 percent to $1,622 an ounce as demand for haven assets diminished.

The cost of insuring Asian corporate and sovereign bonds from default decreased with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan losing 6.5 basis points to 173.5 basis points as of 8:53 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is headed for its lowest close since May 8, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The euro extended last week’s 1 percent jump against the dollar as Greek election winner Antonis Samaras begins his second bid to form a coalition government after a May 6 election left politicians deadlocked. The crisis escalated on June 9 when Spain asked for a bailout of as much as 100 billion-euro ($127 billion) to prop up its banks.

The Australian dollar touched a one-month high as Australia’s Treasurer said mineral exploration spending in the nation rose to a record in March. New Zealand’s dollar reached the strongest in six weeks as data showed the country’s services industries grew last month. "

To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net




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