Asian Automaker Stocks Gain on U.S. Bailout

Asian automaker and financial stocks rose as the U.S. moved closer to a $14 billion rescue of American car companies and South Korea cut interest rates to a record low. Steelmakers dropped after China’s exports fell. Honda Motor Co., earning about 70 percent of its operating profit in North America, gained 6.4 percent after the House approved the loan package, sending it to the Senate. KB Financial Group Inc. surged 7.8 percent in Seoul. Baoshan Iron & Steel Co. fell 1.8 percent after China’s exports dropped for the first time in seven years, while BlueScope Steel Ltd. plunged 25 percent in Sydney after selling stock at a discount. The MSCI Asia Pacific Index added 0.9 percent to 87.18 as of 2:02 p.m. in Tokyo. Almost five stocks rose for every four that fell. The index has rallied 16 percent since reaching a five-year low on Nov. 20 as governments from Australia to India took steps to protect their economies from the financial crisis. “Sentiment is very fragile now and if the U.S. fails to pass the bailout, it will have a damaging impact on investors who are slowly gaining back some confidence,” said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $85 billion. “What’s positive are significant rate cuts around the world and the stimulus plans being put in place.” MSCI’s Asian index is down 45 percent this year, set for its worst annual decline in its 20-year history, as economies in Asia and Europe joined the U.S. in recession. Market declines contributed to the global hedge-fund industry losing $18 billion in November, while investor redemptions accounted for $46 billion of losses, Singapore-based Eurekahedge Pte said today. Nikkei Falls Japan’s Nikkei 225 Stock Average slid 0.3 percent to 8,633.60. Australia’s S&P/ASX 200 Index fell 1.8 percent, led by Woolworths Ltd., after the jobless rate rose to the highest level in a year. Futures on the Standard & Poor’s 500 Index lost 0.5 percent today. The S&P 500 yesterday climbed 1.2 percent, as higher energy and metal prices lifted commodity producers. The House’s approval for a bailout could be a lifeline to General Motors Corp. and Chrysler LLC, which said they would run out of cash within weeks, and may help avert the loss of millions of jobs. The vote sends the measure to the Senate, where opposition is growing. Honda gained 6.4 percent to 2,165 yen, while Mazda Motor Corp. climbed 3.2 percent to 162 yen. Preventing a collapse would also help protect suppliers from Johnson Controls Inc. to Lear Corp. that serve Asian carmakers. ‘Devastating’ Collapse “There were worries about whether the bailout plan would be passed; if not, it could be devastating for markets,” said Nancy Lee, a Hong Kong-based portfolio manager at Taifook Asset Management Ltd., which oversees $500 million. Crude oil gained for a second day on speculation the rescue will prevent fuel demand from declining further. Crude for January delivery rose as much as 72 cents, or 1.7 percent, to $44.24 a barrel, in New York. Oil has fallen 20 percent in the past two weeks as global economic growth slumps. Japan Petroleum Exploration Co., the nation’s second-largest oil producer, jumped 12 percent to 3,840 yen, the biggest percentage gain on MSCI’s Asian index. PetroChina Co., China’s largest oil producer, increased 3.7 percent to HK$7.37. In Seoul, KB Financial, which controls Kookmin Bank, advanced 7.8 percent to 38,250 won. The central bank reduced the seven-day repurchase rate by 100 basis points to 3 percent in Seoul today, the lowest since the bank began to set a policy rate in 1999. The cut was more than expected by any of the 16 economists surveyed by Bloomberg News. Corporate Risk GS Engineering & Construction Co., South Korea’s third- largest builder, climbed 7.6 percent to 62,400. Hyundai Engineering & Construction Co., the fourth biggest, jumped 4.1 percent to 55,400. The cost of protecting Asia Pacific bonds from default declined after the U.S. House approval and Bank of Korea rate cut. The Markit iTraxx Australia index of credit-default swaps fell 10 basis points to 360, according to Citigroup Inc. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan was 5 basis points lower at 375, Barclays Capital prices show. Baoshan Iron & Steel Co., China’s largest steelmaker, slid 1.8 percent to 5.52 yuan. China’s exports fell 2.2 percent, imports plunged and inflation cooled in November to the weakest pace in almost two years. Traffic Slows Cosco Pacific Ltd., Asia’s third-largest container-terminal operator, fell 2.3 percent to HK$6.86. China’s port traffic grew at the slowest pace in 10 years in November, Xinhua news agency said yesterday. “Some economic data, particularly the export numbers, are worse than expected and have put pressure on the market,” said Xu Lirong, a fund manager at Franklin Templeton Sealand Fund Management in Shanghai, which manages the equivalent of $2.56 billion. Bluescope Steel, Australia’s largest steelmaker, fell 25 percent to A$3.02, the most in six years, after announcing plans to sell A$550 million ($364 million) in stock at a 23 percent discount. The company joins Westpac Banking Corp. and Incitec Pivot Ltd. in selling shares at a discount in Australia to raise cash as the global credit crisis squeezes debt markets and slows economies. Rio Tinto Group rose 7.5 percent to A$40.21, after saying it will eliminate 14,000 jobs, reduce debt and slash spending. China Southern Airlines Co. and China Eastern Airlines Co. soared more than 40 percent in Hong Kong after agreeing to sell 3 billion yuan ($437 million) of new shares to their parents to reduce debts. China Southern, the nation’s largest carrier, jumped 44 percent to HK$1.34. China Eastern surged 47 percent to HK$1.10.