Asian Stocks Climb on China’s $586 Billion Stimulus Package

Asian stocks rallied for the first time in three days and U.S. index futures jumped after China announced a $586 billion package to revive growth in the world’s fourth-largest economy.

Hitachi Construction Machinery Co., which generates a sixth of its sales in China, soared 19 percent in Tokyo after the Chinese government announced infrastructure spending, tax deductions and farming subsidies. BHP Billiton Ltd., the world’s largest mining company, rose 7 percent as prices for oil and copper surged. Anhui Conch Cement Co., China’s biggest maker of the building material, climbed 31 percent in Hong Kong.

“It’s a big number and it’ll add to growth,” said Mark Tan, who helps oversee about $3 billion in Asian equities at UOB Asset Management in Singapore and has recently been adding to his stock holdings. “We’re not out of the woods yet, but China has the most resources among major economies to boost growth.”

The MSCI Asia Pacific Index gained 3.1 percent to 89.95 as of 7:49 p.m. in Tokyo. The gauge is still down 43 percent in 2008 as the credit crisis slows global growth, denting demand for Asian exports. Group of 20 leaders said yesterday governments need to use monetary and fiscal policy to support expansion, including new spending and lower interest rates.

Shares on MSCI’s Asian benchmark index are valued at 11 times trailing earnings, compared with a peak of 19 times in November 2007, when investors postulated the region would be able to avoid the fallout from the credit crisis that originated in the U.S.

Japan’s Nikkei 225 Stock Average surged 5.8 percent to 9,081.43. Australia’s S&P/ASX 200 Index gained 1.4 percent as the country’s central bank signaled it’s ready to cut interest rates. New Zealand’s NZX 50 Index rose 1.7 percent following the election of John Key, a former Merrill Lynch & Co. trader, as prime minister.

Stimulus Package

Futures on the Standard & Poor’s 500 Index climbed 2.7 percent today after a person familiar with the matter said American International Group Inc. may get an expanded government rescue package worth more than $150 billion. The S&P advanced 2.9 percent on Nov. 7 as traders bet the Federal Reserve will cut interest rates in the face of rising unemployment.

China’s CSI 300 Index rallied 7.4 percent, the most since Sept. 19, while Hong Kong’s Hang Seng advanced 3.5 percent.

China plans to spend 4 trillion yuan ($586 billion) by 2010 to support growth in its domestic economy as the rest of the world slows, the Beijing-based State Council said yesterday on its Web site. The funds are equivalent to almost a fifth of the nation’s gross domestic product.

Source: Bloomberg