Asia Stocks, Currencies, Gold Rise on APEC Pledge; Dollar Drops

By Masaki Kondo and Lilian Karunungan
Nov. 16 (Bloomberg) -- Asian stocks and emerging markets currencies rose and the dollar began a third week of declines after regional leaders pledged to maintain stimulus measures and Japan’s economy grew faster than economists estimated.
The MSCI Asia Pacific Index climbed 0.5 percent to a three- week high as the Asia-Pacific Economic Cooperation forum said it would keep spending until there was "durable" growth. The Dollar Index lost 0.4 percent to 75.019 as gold advanced to a record. The Malaysian ringgit led gains among Asian currencies after Japan’s gross domestic product rose more than estimated in the third quarter.
"The fundamentals of the economy are continuing to improve," said Masaru Hamasaki, a strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of
$14 billion. "People in the market tend to underestimate the effects of stimulus measures, but they are always effective."
The U.S. currency weakened against 13 of its 16 most-traded counterparts as of 1:19 p.m. in Tokyo. The greenback lost 0.5 percent to $1.4963 against the euro, extending its decline this year to 6.7 percent as governments expanded stimulus measures to arrest the global recession.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against six currencies including the euro and yen, extended a two-week drop, trading at 75.060. The gauge is 0.4 percent from its year-to-date low of 74.774 on Nov. 11.

‘Solid Footing’

The 21-member APEC group said in a statement yesterday the economic recovery isn’t on a "solid footing" yet and pledged to maintain stimulus measures until there is "durable" growth.
They didn’t mention currency distortions, which U.S. companies say give China unfair trade advantages.
Foreign direct investment in China climbed for a third month in October from a year earlier as companies bought into a strengthening economic recovery. Investment rose 5.7 percent to
$7.1 billion, the Ministry of Commerce said at a briefing in Beijing today.
"Nations in the region don’t want China to falter, as its economy is leading the global recovery," said Minoru Shioiri, Tokyo-based chief manager of foreign exchange trading at Mitsubishi UFJ Securities Co. "There’s no chance that China will let the yuan appreciate dramatically. The dollar will continue to be under selling pressure versus higher-yielding currencies."
Asian stocks gained, sending MSCI’s Asian stock gauge toward its sixth advance in seven sessions, led by commodity companies on expectations higher resource prices will boost earnings.
Zijin Mining Group Co., China’s largest gold producer, gained 3.6 in Hong Kong trading while BHP Billiton Ltd., the world’s biggest mining company, added 2.3 percent in Sydney.

Baltic Dry

Shipping shares advanced as the Baltic Dry Index, a measure of shipping costs for commodities, posted its biggest weekly climb in a seven-week winning streak. Mitsui O.S.K. Lines Ltd., operator of the world’s largest merchant fleet, rose 1.5 percent in Tokyo and China Cosco Holdings Co., the biggest operator of dry-bulk ships, climbed 2.7 percent in Shanghai.
Japan’s Nikkei 225 Stock Average swayed between gains and losses as concern that share sales will dilute shareholder value weighed against optimism about a gain in capital spending.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, lost 4.3, while Hitachi Ltd., the fourth- largest company in the Nikkei by sales, plunged 8.2 percent.
Mitsubishi UFJ may announce Japan’s biggest secondary share sale this week as it prepares for stricter global capital rules, eight of nine analysts surveyed by Bloomberg said. Hitachi will raise as much as 418 billion yen ($4.66 billion) from a sale of securities, according to a filing with Japan’s Finance Ministry.
Fast Retailing Co. Japan’s biggest clothing retailer, climbed 3.5 percent, while Tokyo Electric Power Co., Asia’s largest utility, rose 2.1 percent.

Japan GDP

A government report showed Japan’s capital spending rose
1.6 percent in the three months through September, contributing to the nation’s faster-than-estimated economic growth in the quarter. GDP grew at an annual 4.8 percent pace in the third quarter, the Cabinet Office reported today in Tokyo, compared with the median economist estimate for 2.9 percent growth.
"Japan’s GDP was better than forecast which will provide more support for Asian currencies," said Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong. "Risk appetite is picking up again going into this week. We’ll see exports continue to perform well and pick up further."
The ringgit strengthened 0.5 percent to 3.3602 per U.S.
currency in Kuala Lumpur, according to data compiled by Bloomberg. The rupiah appreciated 0.3 percent to 9,350 in Jakarta. The Korean won rose 0.5 percent to 1,154.35 per dollar.
The weakening greenback sent gold prices to a record high as demand increased for the precious metal as a store of value.
Crude oil climbed from a one-month low.

Diversifying Portfolios

"Investors of all levels from retail investors to central banks are really diversifying their portfolios," said Toby Hassall, an analyst with CWA Global Markets Pty Ltd. in Sydney.
"We could see gold head up towards $1,150 before the end of this year, largely a consequence of further weakness in the dollar."
Bullion for immediate delivery advanced as much as 0.9 percent to $1,128.78 an ounce, surpassing the peak reached on Nov. 12. Crude oil for December delivery rose 1.3 percent to
$77.33 a barrel.
Display makers led Taiwan stocks higher after Chi Mei Optoelectronics Corp. and Innolux Display Corp. agreed to merge and create Taiwan’s largest liquid-crystal panel maker. Chi Mei surged by its 6.9 percent daily limit, while Innolux added 0.7 percent.
Chunghwa Picture Tubes Ltd. jumped 7 percent in Taipei and Hannstar Display Corp. added 3 percent.