Asian markets mostly rose Tuesday after Greece’s creditors agreed to extend more financial aid to the debt-struck country, with Tokyo shares ending at a seven-month high, while stocks in Shanghai fell to near four-year lows.
The broad gains came after euro-zone finance ministers, the European Central Bank and the International Monetary Fund all agreed early Tuesday in Brussels to disburse bailout funds to Greece. The IMF said the initiatives include debt buybacks and a reduction on some interest payments by Greece.
“Taken together, these measures will help to bring back Greece’s debt ratio to a sustainable path and facilitate a gradual return to market financing,” IMF Managing Director Christine Lagarde said in a statement.
Japan’s Nikkei Stock Average climbed 0.4%, its best level since late April, after opening slightly lower.
South Korea’s Kospi advanced 0.9%, Taiwan’s Taiex added 0.3%, and Australia’s S&P/ASX 200 index rose 0.7%.
Hong Kong’s Hang Seng Index slipped 0.1% after a choppy afternoon session, while China’s Shanghai Composite Index dropped 1.3% to 1,991.17, its lowest finish since January 2009. The Shenzhen Composite Index, meanwhile, tumbled 3% to 765.52, a closing level it hasn’t seen since March 2009.
The Shanghai benchmark had rebounded sharply to end higher last Wednesday, after it briefly slipped below the psychologically-important 2,000-point level, with some traders interpreting that day’s recovery as a sign that Chinese authorities were watching the equity markets closely and would provide support.
Tuesday’s drop in Shanghai came even as data released by the National Bureau of Statistics showed industrial profits jumped 20.5% in October from the year-ago period, much stronger than the 7.8% increase in September, and reaffirming an improvement in macro-economic conditions.
The improvement in October profits was driven in part by a fall in commodity prices, as well as due to a softer statistical base in the year-earlier period, said Ting Lu, China economist at Bank of America Merrill Lynch. “Going forward, we expect the street to turn more positive on short-term economic and earnings growth,” he said.
But some were downbeat about the trajectory for corporate profits in China.
“We forecast profits falling below 10% of gross domestic product in 2012, which would put them back at their 2007 ratio. We expect … the ratio [to] fall to its pre-World Trade Organization accession level of 4% to 5% over the next few years,” Tim Condon, a Singapore-based economist at ING Financial Markets, wrote in a note before Tuesday’s corporate profit data.
Several chemical and pharmaceutical stocks lost ground in Shanghai, with Harbin Pharmaceutical Group Co. down 5.6% and Zhejiang Xinan Chemical Industrial Group Co. dropping 8.8%.
Shares of Jiugui Liquor Co. plunged by the day’s 10% limit in Shenzhen, after excessive levels of a toxic chemical were found in a baijiu brand of the company recently. State-owned news service Xinhua cited media reports as saying the company would suspend production for equipment upgrades.
The weakness in Shanghai contrasted with broad gains across the region after the Eurogroup deal on Greece debt-reduction targets.
And while the Dow Jones Industrial Average dropped overnight amid concerns over the fiscal cliff, U.S. equity futures advanced in Asian trading hours Tuesday, with Dow industrials futures rising 19 points, or 0.2%, to 12,955.
The dollar moved lower after news of the Greek deal broke, with the U.S. unit trading at 82.17 yen by late afternoon in Tokyo Tuesday, unmoved the level seen in late North American action Monday.
After a recently strong run, some currency-sensitive Japanese exporters retreated as a result, with Honda Motor Co. down 1.4%, and Toyota Motor Corp. losing 1.3%.
But Japanese banks cheered the European agreement, buoying the market. Among the gainers, Mitsubishi UFJ Financial Group Inc. rose 0.5% and Sumitomo Mitsui Financial Group Inc. added 1.4%.
Mitsui O.S.K. Lines Ltd. fell 1.4% after a Nikkei business daily report the firm planned to cut its fleet to 940 from 981 in an effort to turn its business around, following a profit-forecast downgrade last month.
Also in Tokyo, Kansai Electric Power Co. rose 2.7%, recovering from a lower open after a separate Nikkei report said that the firm applied late Monday to raise electricity prices for households.
South Korean stocks rose after the government’s decision to cut the limit on foreign-exchange forward positions in a move that would discourage taking on short-term foreign currency debt and could help stem the won’s appreciation, helping exporters.
Kia Motors Corp. rose 2.9% and Hyundai Motor Co. jumped 3.7%, while Samsung Electronics Co. added 0.9%.
In Australia, CSL Ltd. rallied 6.9% after the blood-products firm upgraded its fiscal-year profit forecast.
In Hong Kong, casino operator Sands China Ltd. rose 1.8%, after shares of its parent Las Vegas Sands Corp. jumped in U.S. after-hours trading on news it was declaring a special dividend.
Shares of China Rongsheng Heavy Industries Group lost 6.7% after the company’s Chairman Zhang Zhirong stepped down. His decision came weeks after an investment firm he controlled settled a case involving insider-trading allegations in the U.S.
