Asia stocks gain on Draghi’s Euro pledge

Singapore: Asian stocks rose, with the regional benchmark index headed for the biggest gain in almost nine months, after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro.

HSBC Holdings Plc, Europe’s biggest lender, rose 2.6 per cent in Hong Kong. LG Display Co., which makes digital products, gained 7.3 per cent in Seoul on expectations earnings will improve. China Zhongwang Holdings Ltd., which makes aluminium used in rail carriages and aeroplanes, jumped 5.9 per cent in Hong Kong after saying profit will increase. Hitachi Chemical Co., a Japanese manufacturer of chemical products, surged 8.9 per cent after raising its profit forecast.

The MSCI Asia Pacific Index rose 2.1 per cent to 116.16 as of 7:45 pm. in Tokyo with about six stocks advancing for each that fell and paring its loss this week to 0.4 per cent. The measure is headed for the biggest daily increase since December 1.

“There’s a fear things are getting out of control, and so Draghi came out with a very strong statement in support of the market that they are going to do everything necessary to support the euro,” said Cameron Peacock, a Melbourne-based market analyst at IG Markets, a provider of trading services for stocks, bonds and currencies. “We are looking at a fairly strong finish to the end of the week.”

The MSCI Asia Pacific Index fell about 12 per cent from this year’s high on February 29 through yesterday amid concern China’s economy is slowing and Europe’s sovereign-debt crisis will worsen. The regional benchmark index traded at 11.6 times estimated earnings as of yesterday, compared with 13.2 for the Standard & Poor’s 500 Index and 10.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average rose 1.5 per cent as a report showed consumer prices fell in June, raising prospects for additional easing. South Korea’s Kospi Index advanced 2.6 per cent. Australia’s S&P/ASX 200 gained 1.5 per cent, while New Zealand’s NZX 50 Index increased 0.5 per cent.

Hong Kong’s Hang Seng Index rose 2 per cent, while China’s Shanghai Composite Index added 0.1 per cent. Singapore’s Straits Times Index fell 0.2 per cent.

Futures on the S&P 500 rose 0.3 per cent on Friday. The gauge added 1.7 per cent in New York yesterday, when US reports on durable goods and jobless claims eased concern that economic growth is slowing. Global stocks rallied after Draghi suggested policy makers may intervene in bond markets as yields surge in Spain and Italy.

Companies that do business in Europe advanced. HSBC added 2.6 per cent to HK$64.10. Konica Minolta Holdings Inc, a maker of photographic film that gets 28 per cent of its sales in Europe, rose 3.8 per cent to 520 yen in Tokyo.

Samsung Surges

Samsung Electronics Co., a consumer electronics company that depends on Europe for 19 per cent of its sales, jumped 5.2 per cent to 1.233 million won. Samsung topped Nokia as the world’s biggest cellphone vendor in the second quarter, according to Strategy Analytics. The Korean company also forecast higher demand for its panel displays and handsets.

Economists surveyed by Bloomberg forecast a report later on Friday will show the US economy grew an annualised 1.4 per cent in the second quarter, compared with a 1.9 per cent expansion in the previous three months. The Federal Open Market Committee meets next week and Chairman Ben S. Bernanke last week said policymakers are studying options for further easing in case economic growth remains too feeble to produce a lasting decline in unemployment.

“Everyone wants to see the Fed embark on a third round of quantitative easing,” Peacock said. “It’s going to provide a temporary boost to the stock market, it’s going to push up commodity prices and it’s going to lower the US dollar. It’s going to make people feel a bit better, but it’s not going to solve any structural problem.”

Technology shares rose the most among the 10 groups on the MSCI Asia Pacific Index. LG Display, owned by mobile phonemaker LG Electronics Inc, soared 7.3 per cent to 23,500 in Seoul won after Hyundai Securities Co. raised its price target by 25 per cent to 35,000 won, saying earnings will improve from August. LG Innotek Co., a mobile-phone component maker, climbed 8.7 per cent to 84,100 won.

Investors also watched earnings reports. Earnings have missed analyst estimates for 51 per cent of the 125 firms listed on the Asia-Pacific gauge that have reported quarterly results and offered forecasts this month, according to data compiled by Bloomberg.

China Zhongwang added 5.9 per cent to HK$2.86 after the company said it expects its first-half profit will increase “substantially.”

Hitachi Chemical jumped 8.9 per cent to 1,195 yen after raising its fiscal-year net income forecast 9.3 per cent to 23.5 billion yen, more than an analyst estimate of 20.9 billion yen.