Asian stocks rise on earnings, Japan jobless data, US growth

02-Nov-2009 Intellasia | Bloomberg | 7:01 AM Print This Post

Asian stocks advanced, paring the MSCI Asia Pacific Index’s first monthly decline since February, as better-than-estimated earnings and Japan jobless figures followed a rebound in US economic growth.

Industrial & Commercial Bank of China Ltd and Bank of China Ltd gained more than 3 percent on profits that topped analyst predictions. Olympus Corp., a camera maker that gets 24 percent of its sales in North America, surged 9.2 percent in Tokyo after the Nikkei newspaper said the company will probably beat its earnings forecast. Rio Tinto Group, the world’s No. 3 mining company, rose 4.6 percent as commodity prices increased.

The MSCI Asia Pacific Index added 1.5 percent to 116.45 as of 7:23 p.m. in Tokyo, paring its drop this week to 2.6 percent. The gauge has lost 1.3 percent in October on concern governments will start withdrawing measures enacted to revive global growth. Australia this month became the first Group of 20 nation to raise interest rates amid signs of strength in its economy.

“The expectation is that the world economy will still grow faster in 2010 compared with this year, even with the anticipated withdrawal of stimulus spending by governments,” said Joel Mendoza, investment strategist at BDO Private Bank Inc. in Manila, which manages at least $2 billion in assets. “The easy money has been made and the challenge now is to find the gems in the market.”

Japan’s Nikkei 225 Stock Average rose 1.5 percent, while Hong Kong’s Hang Seng Index climbed 2.3 percent. China’s Shanghai Composite Index added 1.2 percent. Australia’s S&P/ASX 200 Index increased 1.5 percent.

US Growth

Komatsu Ltd, the world’s second-biggest maker of construction equipment, advanced 4.1 percent even after its first-half net income sank. Samsung Electronics Co., which gets 19 percent of its sales from America, advanced 0.7 percent after tripling profits. Sony Corp., maker of the PlayStation game console, gained 2.8 percent as the yen weakened.

Futures on the US Standard & Poor’s 500 Index lost 0.3 percent. The gauge jumped 2.3 percent yesterday, the largest advance since July 23, as the US government said gross domestic product grew at a 3.5 percent pace from July through September. The growth, which followed four quarters of contraction, topped the median estimate of 3.2 percent in a Bloomberg survey of economists.

Japan’s statistics bureau said today the country’s unemployment rate declined to 5.3 percent from 5.5 percent in August. The median estimate of 29 economists surveyed by Bloomberg was for the rate to increase to 5.6 percent.

‘Sigh Of Relief’

“There’s a sigh of relief,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd in Melbourne. “The Japan data gives credence to the breadth of the recovery, that it’s not just occurring in the developing economies, and that’s very important for the sustainability of it.”

Industrial & Commercial Bank and Bank of China’s third- quarter earnings were buoyed by a loan surge and lower provisions for potential losses on loans and investments.

ICBC gained 3.5 percent to HK$6.29 after net income in the period rose 19 percent to 33.6 billion yuan ($4.9 billion). Bank of China, whose profit in the quarter also jumped 19 percent, climbed 5.8 percent to HK$4.58. Both beat the average estimate of analysts surveyed by Bloomberg News.

In Tokyo, Olympus surged 9.2 percent to 2,900 yen. The Nikkei newspaper said the company may beat its 19 billion yen ($208 million) operating profit forecast for the six months ended September by about 50 percent. Merrill Lynch & Co. also raised the stock’s rating to “buy” from “underperform.”

Positive Surprises

“I see many positive surprises and many companies are likely to raise profit forecasts,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “A gradual recovery will continue in the October-December period.”

Sharp Corp. advanced 2.5 percent to 991 yen. Japan’s largest maker of liquid-crystal displays posted a loss of 17.7 billion yen, less than the 19 billion yen median of five analyst estimates compiled by Bloomberg.

Komatsu added 4.1 percent to 1,818 yen after posting first- half net income that was more than double the company’s estimate. Samsung Electronics Co. added 0.7 percent to 723,000 won. Asia’s biggest maker of chips, flat screens and mobile phones said profit tripled to a quarterly record as the global economic recovery spurred a rebound in prices.

‘Fragile’ Economy

The MSCI Asia Pacific Index has climbed 65 percent from a more than five-year low on March 9, outpacing gains of more than 50 percent by the S&P 500 and Europe’s Dow Jones Stoxx 600 Index. Stocks in the MSCI index are valued at 23 times estimated earnings, compared with 17 times for the S&P and 15 times for the Stoxx 600.

Signs of an economic recovery have prompted some countries to wind down stimulus policies. Earlier this week, India’s central bank governor indicated it was time to shift policy toward stemming inflation, while the Bank of Japan said today it will let its programmes of buying corporate debt expire at the year’s end.

Australia’s central bank raised its key interest rate on October 6 after the number of people employed unexpectedly rose in September and the jobless rate fell. Michael Smith, chief executive officer of Australia & New Zealand Banking Group Ltd, said yesterday the Reserve Bank of Australia should have waited to raise rates as the country’s economy was “still fragile.”

Raw-material producers accounted for 13 percent of the MSCI Asia Pacific Index’s advance today. The London Metals Index, a measure of six metals including copper and zinc, rallied 3.5 percent, the largest advance in three weeks. Crude oil climbed 3.1 percent to $79.87 a barrel in New York yesterday.

Rio, BHP

Rio Tinto Group rose 4.6 percent to A$63.78. BHP Billiton Ltd, the world’s largest mining company and Australia’s biggest oil producer, gained 0.9 percent to A$37.45.

Sony gained 2.8 percent to 2,785 yen amid hopes the weaker yen will raise the value of sales generated overseas in local terms for Japanese companies. The yen depreciated to 91.58, compared with 90.39 against the dollar at the close of stock trading in Tokyo yesterday. Against the euro, Japan’s currency weakened to 135.92 from 133.14.

Nintendo Co., the world’s largest maker of video-game players, fell 3.6 percent to 23,180 yen after slashing its full- year net income forecast on slumping sales of its Wii console.

Net income will fall to 230 billion yen in the year to March 2010, the company said. The projected profit, the first annual drop in six years, missed the 270 billion yen median of 23 analyst estimates compiled by Bloomberg.

In Sydney, Crane Group Ltd shares tumbled 12 percent to A$9.04 after the company said profit before significant items in fiscal 2010 may be about 30 percent lower than a year earlier.


Category: Finance

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