Asian Stocks Rise for First Time in Five Days; Komatsu Advances

By Chen Shiyin
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Aug. 18 (Bloomberg) -- Asian stocks rose for the first time in five days, led by Japanese manufacturers, as the cheapest valuations in more than a decade prompted brokerages to recommend purchasing shares.

Komatsu Ltd., the world's No. 2 earthmover maker, climbed 3.8 percent as Nikko Citigroup Ltd. upgraded the shares on sales prospects in emerging markets. Sumitomo Metal Industries Ltd., Japan's third-biggest steelmaker, rose 7.4 percent as Mitsubishi UFJ Securities Co. raised its rating. Citic Securities Co. plunged 8.7 percent on concern China's government will avoid measures to support the worst-performing stock market of 2008.

``Valuations are cheap right now and while they're still coming down, the silver lining is that earnings are going to improve,'' said James Chua, an investment analyst at Phillip Capital Management Ltd. in Singapore, which oversees about $450 million. ``It's hard to pick a bottom in the market but it may be nearer than we think.''

The MSCI Asia-Pacific Index added 0.3 percent to 125.20 as of 7:27 p.m. in Tokyo, halting a four-day, 3 percent drop. The sell-off took the value of the index last week to 11 times reported profit, the lowest for the measure since at least 1995, data compiled by Bloomberg show.

The gauge has slumped 21 percent this year as soaring inflation slowed global growth and the world's largest financial companies posted writedowns and credit losses of more than $500 billion. Hong Kong's economy grew in the second quarter at the slowest pace in five years, government figures on Aug. 15 showed. The Hang Seng Index lost 1.1 percent today, led by Sun Hung Kai Properties Ltd., the city's No. 1 developer.

Japan Gains

Japan's Nikkei 225 Stock Average added 1.1 percent to 13,165.45. Pakistan's Karachi Stock Exchange 100 Index jumped 4.5 percent after President Pervez Musharraf resigned to avoid facing impeachment charges. Benchmarks fell in most other Asian markets, led by China's CSI 300 Index, which slumped 5.5 percent. Indonesia and the Philippines are closed for holidays.

Nippon Sharyo Ltd., Japan's biggest maker of high-speed trains, soared by 30 percent in Tokyo trading after Central Japan Railway Co. offered to take a majority stake. China South Locomotive & Rolling Stock Corp., the nation's biggest maker of trains, surged on its Shanghai trading debut.

U.S. stocks rose on Aug. 15, sending the Standard & Poor's 500 Index to its third weekly gain. Wal-Mart Stores Inc. led retailers higher after oil prices retreated. S&P 500 futures fell 0.4 percent today.

Komatsu jumped 90 yen to 2,445. The stock gained the most since July 22 after Nikko Citigroup analyst Yoshinao Ibara upgraded his recommendation to ``buy'' from ``hold,'' saying the company is countering risks of a slowdown in developed economies by tapping demand from ``resource-rich countries.''

`Excessively Undervalued'

Sumitomo Metal Industries rallied 33 yen to 481, its largest advance since Aug. 23, 2007. Mitsubishi UFJ Securities Co. upgraded the stock to ``outperform'' from ``market perform,'' saying that higher seamless-pipe prices will boost earnings in the second half.

Doosan Construction & Engineering Co. led gains among South Korean builders after Merrill Lynch & Co. said a recent slump may be an opportunity to buy the shares. A measure of construction stocks on the Kospi index has dropped 35 percent this year, the largest loss among 19 industry groups, amid soaring raw-material costs and a lack of government deregulation in the industry.

``The real demands are still intact,'' Merrill analysts Elli Lee and Young-Ah Han wrote in a report today. ``This is time to fish for excessively undervalued engineering and construction names that could survive to enjoy the next round of growth.''

Doosan jumped 7.5 percent to 7,850 won. GS Engineering & Construction Corp., the country's fourth-biggest builder, jumped 4.7 percent to 111,000 won.

Train Stocks Rally

Measures tracking industrial and materials stocks on the MSCI Asia-Pacific Index are valued at less than 13 times reported earnings, the cheapest among the broader gauge's 10 industry groups.

Nippon Sharyo surged 80 yen to 348. Central Japan, the country's largest operator of bullet trains, offered to pay up to 370 yen a share to raise its share of outstanding shares to 50.1 percent from 1.8 percent. Central Japan fell 1.2 percent to 1.078 million yen.

China South Locomotive & Rolling jumped 58 percent to 3.45 yuan after raising $1.48 billion in a combined Shanghai and Hong Kong listing. It's the best trading debut in Shanghai since Zijin Mining Group Co.'s 95 percent gain on April 25.

China's Slump

The share sale tested investors' appetite as China's CSI 300 Index plunged 57 percent this year amid concern government measures to contain inflation will stunt growth and earnings. Losses today sent the benchmark to its lowest since February 2007.

Citic Securities, China's biggest brokerage, tumbled 1.58 yuan to 16.61. The country said it will seek to channel investment by pension funds, insurers and other large institutions into stocks, without giving details.

``There is no confidence in the market,'' said Wu Kan, a fund manager in Shanghai at Dazhong Insurance Co., which oversees the equivalent of $285 million. ``Everyone is disappointed that the regulator hasn't done anything concrete to stem the decline.''

In Hong Kong, Sun Hung Kai slipped 0.9 percent to HK$108.90. Cheung Kong (Holdings) Ltd., the city's No. 2 developer by market value, fell 1.5 percent to HK$106.60. The city's gross domestic product rose 4.2 percent in the second quarter from a year earlier, the government said on Aug. 15, missing the 5.9 percent median estimate of 15 economists surveyed by Bloomberg.

Foxconn International Holdings Ltd., the world's biggest contract maker of mobile phones, plunged a record 24 percent to HK$5.84 after saying it will report a ``significant decline in first-half profit.''

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net