Asian stocks rebounded from earlier losses after Dubai secured $10 billion of funding to repay its debt. Japan shares dropped as a measure of business confidence showed companies are scaling back investment plans.
Samsung C&T Corp, builder of the world’s tallest tower in Dubai, climbed 3.3 per cent after Abu Dhabi agreed to provide the money for Dubai’s financial support fund. Standard Chartered Plc, which has made loans to the Middle East, climbed 4.8 per cent in Hong Kong. Mitsubishi UFJ Financial Group Inc, Japan’s biggest bank by value, sank 2.9 per cent after the country’s Tankan confidence survey was released.
The MSCI Asia Pacific Index added 0.5 per cent to 120.32 at 7.25 pm in Tokyo. It dropped 0.6 per cent earlier. The gauge fell by 0.4 per cent last week as downgrades to Greece’s credit rating exacerbated credit-market concern sparked by Dubai World’s plan to reschedule payments on its liabilities.
“It’s a positive development if Dubai steps in and says look, we’ll honour these debts,” said Prasad Patkar, who helps manage $1.7 billion at Platypus Asset Management in Sydney. “It has the potential to help along the subdued investor risk appetite that was in place the last couple of weeks.”
Japan’s Topix Index declined 0.4 per cent. The Tankan survey of confidence among the country’s largest manufacturers rose the least since the economy emerged from its worst postwar recession.
Qantas, Alumina
China’s Shanghai Composite Index gained 1.7 per cent. Hong Kong’s Hang Seng Index added 0.8 per cent, while South Korea’s Kospi Index gained 0.5 per cent.
Australia’s S&P/ASX 200 Index rose 0.4 per cent. Qantas Airways Ltd surged 3.5 per cent in Sydney on plans to raise its international airfares. Alumina Ltd jumped 6.4 per cent after JPMorgan Chase & Co boosted the profit outlook for Alcoa Inc, the largest US aluminum producer.
Futures on the Standard & Poor’s 500 Index climbed 0.8 per cent, while the MSCI World Index added 0.2 per cent. The US futures contracts rebounded from an earlier 0.3 per cent drop after Abu Dhabi’s financing for Dubai was announced. The money will help repay obligations including $4.1 billion needed for a Nakheel PJSC Islamic bond maturing today.
State-controlled Dubai World said on December 1 it is seeking to restructure $26 billion of debt, less than half the $59 billion of liabilities it had at the end of 2008.
Dubai world
Samsung C&T climbed 3.3 per cent to 49,500 won. The stock slumped as much as 14 per cent after the Dubai government said on November 25 that Dubai World was seeking a “standstill” accord on its debt. Samsung C&T said on November 27 it stopped work on a $350 million bridge in Dubai after Nakheel halted payments.
Standard Chartered gained 4.8 per cent to HK$197.20. The bank has $18 billion of loans to the Middle East and South Asia, of which two-thirds relates to the United Arab Emirates, Finance Director Richard Meddings said on December 9.
HSBC Holdings Plc, Europe’s largest bank, added 1.4 per cent to HK$91.45. The London-based banks are among Dubai World’s six main creditors, a banker familiar with the talks last week.
“Markets are likely to take the news positively in the immediate term as concerns are lifted,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc, which oversees $222 billion worldwide as of September. “Dubai is a symptom of a problem over the past decade of excessively loose credit and liquidity. That requires a long time to work through.”
In Tokyo, Obayashi Corp lost 1.6 per cent to 301 yen, paring an earlier slump of 5.9 per cent. General contractors and machinery makers were holding about $7.5 billion of bills owed by the Dubai government and its affiliated companies as of October 31, Nikkei reported, citing the Japanese government.
Kajima Corp rose 1.1 per cent to 184 yen, after slumping 5.5 per cent. Mitsubishi Heavy Industries Ltd added 0.3 per cent to 322 yen, having earlier lost 1.6 per cent. Both companies were also named in the Nikkei report.
