Asian Stocks Advance, Led by Rio, Posco, on Takeovers, Metals

Asian stocks climbed, driving benchmarks in South Korea and Hong Kong to records, on takeover speculation in the metals industry and higher commodity prices.

Rio Tinto Group climbed to a new high after a newspaper report said it would bid for Alcan Inc. The world's No. 3 mining company announced an offer after the close of trading in Australia. South Korea's Posco led the region's steel producers higher after Chaparral Steel Co. agreed to be bought for $4.22 billion.

``We'll continue to see a spate of takeovers across the region,'' said Nicole Sze, a Singapore-based analyst at Bank Julius Baer & Co., which manages $350 billion worldwide. Mergers and acquisitions ``help create positive sentiment as investors look to see who the next target will be.''

Samsung Electronics Co. paced gains in South Korea after an interest-rate increase reinforced confidence in the nation's economic recovery. China Mobile Ltd. rose in Hong Kong after Citigroup Inc. recommended investors buy the stock.

The Morgan Stanley Capital International Asia-Pacific Index added 0.1 percent to 157.34 at 6:09 p.m. in Tokyo, after falling yesterday by the most in two weeks. A measure of materials shares including BHP Billiton Ltd., the world's biggest mining company, posted the second-biggest advance among its 10 industry groups.

South Korea's Kospi index jumped 1.1 percent, closing above 1900 for the first time, while the Hang Seng Index gained 0.9 percent. All other benchmarks climbed, except in Thailand and Japan, where the Nikkei 225 Stock Average lost 0.4 percent as the Bank of Japan kept its key interest rate at 0.5 percent.

Japanese brokerages dropped after Deutsche Bank AG lowered its stock-price forecast for Nomura Holdings Inc., citing possible losses in subprime, or higher risk, loan-related assets.

M&As

U.S. shares gained yesterday, spurred by speculation of takeovers in the metals industry and as concern eased that a sell- off in subprime-loan related securities would affect other areas of the world's biggest economy.

Rio Tinto rose 1 percent to A$103.84. The stock closed at an all-time high after the Times of London reported the company was ``poised'' to make a bid for Alcan, a Montreal-based aluminum producer. After the market closed, Rio said it had agreed to buy Alcan for $38.1 billion, trumping New York-based Alcoa Inc.'s $27.7 billion hostile bid.

BHP climbed 2.4 percent to A$38.72. Zinifex Ltd., the world's third-largest zinc producer, gained 2 percent to A$20.60.

Posco, Steelmakers

A measure of six metals traded on the London Metal Exchange added 1.1 percent yesterday. Zinc gained 2.1 percent and nickel climbed 2 percent.

Steel stocks tracked gains by U.S. peers yesterday after Gerdau Ameristeel Corp., the U.S. unit of Latin America's biggest steelmaker, agreed to buy Texas-based Chaparral Steel for $86 a share. Posco, Asia's No. 3 steelmaker, jumped 3.6 percent to 510,000 won, a record. Separately, Daishin Securities Co. raised its six-month price estimate on the stock to 600,000 won.

BlueScope Steel Ltd., Australia's biggest producer, rose 2.2 percent to A$11.08. Angang Steel Co., China's biggest Hong Kong- listed steelmaker by value, gained 2.5 percent to HK$17.98.

South Korean stocks advanced even as the central bank raised its key interest rate to a six-year high of 4.75 percent. Lee Seong Tae, the governor of the Bank of Korea, said the higher rate will still support economic growth.

Samsung Electronics, the world's biggest computer-memory maker, gained 1.7 percent to 646,000 won. Hynix Semiconductor Inc., the second largest, added 1.6 percent to 38,800 won.

`Should Do Well'

``Rates weren't raised because of financial problems but because economic growth is expected to speed up, as the central bank had said earlier,'' said Choi Chang Hoon, who helps manage $870 million at Woori Credit Suisse Asset Management Co. in Seoul. ``People expect the global economies to improve, so the exporters such as tech companies and automakers should do well in the second half.''

Separately, Korea Investment & Securities Co. lifted its six- month price estimate for Samsung by 6 percent to 700,000 won, and for Hynix by 5.1 percent to 41,000 won. The computer-memory industry will expand as use of Microsoft Corp.'s Windows Vista operating system spreads and the size of data exchanged over the Internet climbs, Greg Roh, an analyst, wrote in a report.

China Mobile, the world's largest mobile-phone operator by users, climbed 3.7 percent to HK$89.05 after the stock was raised to ``buy'' from ``hold'' at Citigroup. The company will dominate China's telecommunications industry in the next two-to-three years, analysts at the investment bank wrote in a report.

China Life Insurance Co., the nation's biggest insurer, gained 1 percent to HK$30.45 in Hong Kong. Ping An Insurance (Group) Co., the second largest, added 4.2 percent to HK$61.30.

Boost Returns

China will allow insurers to double the share of assets invested in local equities to 10 percent, according to industry executives briefed by the Insurance Regulatory Commission. The move will help China Life, Ping An and competitors boost returns from their $321 billion of assets.

Separately, Citigroup raised its share-price estimate for Ping An to HK$68.50 from HK$50.56 on improved investment yield, Bob Leung, an analyst at the brokerage, said in a report today.

Nomura, Japan's largest brokerage, plunged 4.8 percent to 2,205 yen, its biggest drop since March 5. Tatsuo Majima, a Tokyo- based analyst at Deutsche Bank AG lowered his price estimate for the stock to 2,200 yen from 2,550 yen.

Majima estimates Nomura posted losses in the value of subprime-loan related assets of more than 30 billion yen ($245 million) for the year ended March 2007 and said the loss may increase by six to nine billion yen in the quarter ended June 30.

``Investors are trying to spot companies that may be hurt by subprime loans, as though they're looking for land mines,'' said Junichi Misawa, who oversees $655 million at STB Asset Management Co. in Tokyo. ``Negative news may prompt a sell-off for the time being, as happened with Nomura today.''

Daiwa Securities Group Inc., Japan's second-largest brokerage, lost 1.8 percent to 1,305 yen. Nikko Cordial Corp., the No. 3, fell 1.2 percent to 1,625.

Alcan Inc. (AL US)
Alcoa Inc. (AA UA)
Angang Steel Co. (347 HK)
BHP Billiton Ltd. (BHP AU)
BlueScope Steel Ltd. (BSL AU)
Chaparral Steel Co. (CHAP US)
China Life Insurance Co. (2628 HK)
China Mobile Ltd. (941 HK)
Daiwa Securities Group Inc. (8601 JT)
Hynix Semiconductor Inc. (000660 KS)
Gerdau Ameristeel Corp. (GNA US)
Nikko Cordial Corp. (8603 JT)
Nomura Holdings Inc. (8604 JT)
Ping An Insurance (Group) Co. (2318 HK)
Rio Tinto Group (RIO AU)
Samsung Electronics Co. (005930 KS)

source:bloomberg.com