Sept. 27 (Bloomberg) --
"Asian stocks rebounded from the biggest slide in two months and the Australian dollar rose as China’s industrial profits fell for a fifth month, increasing speculation the government will do more to support economic growth. Emerging-market currencies strengthened.
The MSCI Asia Pacific Index climbed 0.4 percent at 1:45 p.m. in Tokyo, as the Shanghai Composite Index added 0.3 percent. Futures on the Standard & Poor’s 500 Index advanced 0.4 percent while contracts on the FTSE 100 Index added 0.2 percent. The so-called Aussie, Malaysia’s ringgit and the Philippine peso rose at least 0.3 percent against the dollar.
A government report showed Chinese industrial companies’ profits dropped in August and a Bank of Korea index of manufacturers confidence for October was at 72 from 75 the previous month, after reaching 70 in August, the lowest level since May 2009. China’s central bank added a net 365 billion yuan ($58 billion) to the financial system this week, the highest in Bloomberg data going back to 2008, as cash demand rises before a weeklong holiday next week.
“The positive would be a big China stimulus package that could send markets higher,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $150 billion. “The signals are that they are not really itching to do that.”
China Overseas
About five stocks gained for every four that fell on the MSCI Asia Pacific Index, which climbed 3.7 percent this quarter through yesterday as central banks in Europe, the U.S., Japan and China took action to boost their economies. The gauge slumped 1.4 percent yesterday, the most since July 23.
China Overseas Land & Investment Ltd., the country’s biggest developer by market value listed in Hong Kong, rose 0.5 percent. Komatsu Ltd., a maker of construction equipment that gets about 15 percent of its sales in China, gained 0.3 percent.
Baoshan Iron & Steel Co., the nation’s largest publicly traded steelmaker, fell 0.2 percent as the company suspended production at a Chinese plant after demand dropped for slabs used to make ships and bridges. China is unlikely to introduce any large stimulus plans on infrastructure investment in the near term because economic development is already “unbalanced,” a company executive said at a conference today.
Aussie, Kiwi
The Australian dollar was at $1.0398, rebounding from a two-week low, while the country’s bonds pared gains. New Zealand’s dollar added 0.2 percent after data showed the business outlook improved this month. The euro was 0.3 percent from a two-week low against the dollar and was last at $1.2876.
Asian currencies rose toward a four-month high, led by the Philippine peso and Malaysia’s ringgit, on optimism regional economies have scope to combat slowdowns by boosting state spending. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, was at 116.80. The gauge reached 117.06 on Sept. 21, the highest level since May 2.
“The Philippines and Malaysia would have the fiscal space to deal with the slowdown from the external side,” said Enrico Tanuwidjaja, an economist at Royal Bank of Scotland Group Plc. “I don’t see a massive gain in Asian currencies. Globally, markets are still looking at the developments in Europe.”
A final reading of the consumer confidence index in the euro area probably dropped to minus 25.9 this month, the lowest since May 2009, according to economists surveyed by Bloomberg News before the data due today, while a U.S. report may show orders for durable goods orders fell.
Euro Prospect
The exit of one or more member states from the euro won’t destroy the monetary union or the project of European integration, Czech President Vaclav Klaus said. An accord that paved the way to cut Ireland’s legacy bank debt won’t unravel, said Irish deputy prime minister Eamon Gilmore. Germany, the Netherlands and Finland indicated a retreat from the agreement to allow the euro-area bailout fund to recapitalize banks.
U.S. stocks fell for a fifth day yesterday in the longest slump since July as protests against European austerity measures fueled concern the region’s fiscal crisis may escalate. Spanish protesters yesterday marched for a second night in Madrid, calling on Prime Minister Mariano Rajoy to reverse budget cuts, while police in Athens dispersed protestors with tear gas.
The S&P 500 has erased all its gains since the Federal Reserve said Sept. 13 that it will undertake a third round of quantitative easing and probably hold the federal funds rate near zero until at least the middle of 2015.
Worldwide corporate issuance of $949 billion since June 30 brings the total for the year to $2.9 trillion, the second- fastest pace on record, according to data compiled by Bloomberg, as unprecedented investor demand allows issuers to refinance debt with borrowing costs at all-time-lows. "
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ;
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Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
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E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
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