Nov. 30 (Bloomberg) — Asia stocks and currencies rose as the United Arab Emirates pledged support for its banks, easing concerns that losses from Dubai World will spread. Treasuries and the cost of protecting corporate debt fell.
The MSCI Asia Pacific Index climbed 3.3 percent to 117.66 as of 3:04 p.m. in Tokyo, the biggest gain since April 2. South Korea’s won strengthened the most in a month. Commonwealth Bank of Australia advanced after the country’s four biggest lenders said they don’t expect “material” losses from the possible default by Dubai World, an investment company burdened by $59 billion of liabilities.
Standard & Poor’s 500 Index futures added 0.5 percent after the Central Bank of the U.A.E. said it “stands behind” the country’s lenders, allowing them to borrow money for half a percentage point above the three-month local benchmark interest rate. Equities also gained after China’s government said it will maintain stimulus policies, lifting the MSCI World Index 0.7 percent from a three-week low.
“There is relief that things are not as serious as they might be,” said Matt Riordan, who helps manage about $5.1 billion at Paradice Investment Management in Sydney. “The risk of a serious contagion affecting the global financial system doesn’t now seem likely or probable.”
Finance companies were the biggest boost to the MSCI Asia Pacific Index. Commonwealth Bank rose 4.5 percent while National Australia Bank Ltd., the country’s third-biggest lender by value, gained 6 percent. HSBC Holdings Plc, which said it had more deposits than loans in Dubai, added 3.7 percent.
Samsung C&T Corp., builder of the Dubai tower that will be the world’s tallest tower when completed, added 4.6 percent, rebounding from an 8.1 percent drop on Nov. 27. It stopped work on a $350 million Dubai bridge after payments were halted.
South Korea’s won rose 1.1 percent to 1,162 per dollar after the Finance Ministry said the nation’s banks have “limited” exposure to Dubai debt at around $88 million. Malaysia’s ringgit gained 0.6 percent to 3.3920 before a government report later this week that will probably show a slump in Malaysia’s exports eased to 10.3 percent in October from 24.2 percent in September, a Bloomberg survey showed.
The Japanese currency gained 0.2 percent to 86.22, paring an earlier decline against the dollar after Dubai World’s property unit sought to suspend its Islamic bonds, reviving demand for the relative safety of the yen.
Australia’s currency rose 1.7 percent to 91.62 U.S. cents on speculation the central bank will increase interest rates tomorrow for a record third month. Policy makers will raise the target rate by 25 basis points to 3.75 percent, according to 20 of 21 economists surveyed by Bloomberg News on Nov. 27.
Chinese yuan 12-month non-deliverable forwards rose 0.1 percent to 6.629 per dollar, even as European officials indicated after meetings in yesterday that they have failed to shift Chinese policies that peg the yuan to the dollar.
China’s Shanghai Composite Index rose 2.5 percent, rebounding from a weekly loss, after the government said the nation will maintain stimulus policies next year. The measure plunged 6.4 percent last week, the most in three months, on concern banks will sell shares to replenish capital depleted by loan growth.
Lenovo Group Ltd., China’s biggest personal-computer maker, rose 5.2 percent in Hong Kong trading, the most in seven weeks the company said it plans to buy back a handset unit that it sold last year. Sands China Ltd., the Macau casino operator, tumbled 13 percent on its first day of trading.
India’s benchmark Bombay Stock Exchange’s Sensitive Index advanced 1.8 percent, the most since Nov. 11, after a report showed the nation’s economy expanded by 7.9 percent in the July to September quarter from a year earlier, the fastest pace in 1 1/2 years. The rupee gained 0.4 percent to 46.46.
U.S. Treasuries fell as global equities climbed. The yield on the benchmark 10-year note increased three basis points to 3.23 percent as in Tokyo, according to BGCantor Market Data. The 3.375 percent security maturing in November 2019 fell 1/4, or $2.50 per $1,000 face amount, to 101 7/32.
Crude oil for January delivery recovered some of the ground lost Nov. 27 as concerns over Dubai World’s debt eased. The contract rose as much as 78 cents, or 1 percent, to $76.50 a barrel on the New York Mercantile Exchange, and was at $76.14.
Goldman Sachs Group Inc., Citigroup Inc. and BNP Paribas forecast further gains for regional equities in reports received today. Asian stocks may offer returns of 36 percent in dollar terms next year, helped by growth in emerging markets, said Goldman Sachs, the most bullish among the three. BNP expects the MSCI Asia excluding Japan Index to rise 20 percent in the next 12 months, while Citigroup Inc. predicted gains of as much as 14 percent.
“This is a good opportunity to enter the market after an over-reaction last Friday,” said Brian Jackson, a senior strategist for emerging markets at the Royal Bank of Canada in Hong Kong. “A lot of things have become clearer since last Friday and there’s a rebound in risk opportunity.”