Asian Stocks Rally on Economic Growth Optimism; Hon Hai Jumps

By Jonathan Burgos and Shani Raja

May 5 (Bloomberg) -- Asian stocks rose, extending a rally in which global equities have wiped out their 2009 losses, as better-than-expected U.S. home sales added to signs the worst of the global recession has passed.

Fisher & Paykel Appliances Holdings Ltd., which gets 25 percent of its sales from North America, surged 7.8 percent in Wellington. Hon Hai Precision Industry Co., the world’s largest electronic contract manufacturer, jumped 6.9 percent as JPMorgan Chase & Co. raised its share-price target. BHP Billiton Ltd., the world’s biggest mining company, rose 2 percent after copper and crude oil prices rallied in New York yesterday.

“People are realizing that, although things aren’t wonderful, the rate of decline is slowing,” said Montana-based Don Gimbel, who helps manage $2 billion of international equities at Carret & Co. “There is the anticipation that over the next 18 months things are going to get better.”

The MSCI AC Asia Pacific excluding Japan Index rose 0.8 percent to 298.14 as of 10:54 a.m. in Hong Kong. The gauge has surged 43 percent in the past two months on optimism the worst of the financial crisis had passed. The MSCI World Index added 0.3 percent, leaving it up 0.4 percent for the year.

Markets in Japan, South Korea and Thailand are closed today. Taiwan’s Taiex Index gained 1.6 percent, adding to a three-day, 13 percent surge on optimism closer ties with China will boost economic growth. Australia’s S&P/ASX 200 Index added 0.3 percent ahead of an interest-rate decision from the central bank.

Home Sales

Farglory Land Development Co. and Cathay Real Estate Development Co., Taiwan’s two largest construction companies, both surged 7 percent on speculation the island may allow Chinese investors to buy real estate. Electronics manufacturer Venture Corp. rose 4 percent in Singapore as BNP Paribas recommended investors buy the stock. Li & Fung Ltd., a Hong Kong trading company, slumped 6.7 percent on a share sale.

U.S. Standard & Poor’s 500 Index futures lost 0.3 percent. The gauge climbed 3.4 percent yesterday, erasing its declines for the year as the National Association of Realtors said purchases of previously owned homes jumped 3.2 percent in March. Economists in a Bloomberg survey projected no change. A separate government report showed spending on U.S. construction projects rose last month.

Fisher & Paykel, which makes washers and dryers, surged 7.8 percent to 55 New Zealand cents. James Hardie Industries NV, the biggest seller of home siding in the U.S., climbed 6 percent to A$4.95.

Hon Hai, which gets 38 percent of its revenue from America, climbed 6.9 percent to NT$109 in Taipei. JPMorgan raised its share-price target to NT$110 from NT$58 and maintained its “neutral” rating.

Interest Rates

Hon Hai said yesterday it boosted its workforce by 5 percent in the last quarter as orders for mobile phones and computers rebounded.

The MSCI Asia Pacific Index, which includes Japan, rallied 29 percent in the past two months on optimism government stimulus packages and interest-rate cuts will pull the global economy out of recession. Australia’s central bank may leave borrowing costs unchanged today at the lowest rates in 49 years, according to 18 of 19 economists surveyed by Bloomberg.

“Confidence has returned with the growing belief that the worst is behind us,” said Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney. “It’s still a long road to recovery, however.”

BHP gained 2 percent to A$34.51. Rio Tinto Group, the world’s third-biggest mining company, climbed 2.6 percent to A$69.08. Woodside Petroleum Ltd., Australia’s second-largest oil producer, added 2.9 percent to A$41.67.

Brokerage Upgrades

Copper futures rose 2.1 percent to a two-week high, in New York yesterday, while oil climbed 2.4 percent to a five-month high on expectations commodities demand will improve as global growth recovers.

Farglory Land rose by its daily 7 percent limit to NT$48.35. Cathay Real Estate Development Co. surged 7 percent to NT$11.50.

Taiwan may allow investors from mainland China to buy real estate on the island, the Economic Daily News reported, without saying where it got the information. Rules that may be issued within two weeks may permit mainland investors to acquire offices, factories and housing for employees, while speculative investing won’t be allowed, the newspaper reported.

Venture, Singapore’s biggest publicly traded electronics contract manufacturer, jumped 4 percent to S$6.74 in Singapore. BNP Paribas raised its rating on the stock to “buy” from “reduce” in anticipation of rising orders.

Li & Fung, which sells goods to Wal-Mart Stores Inc. and Target Corp., slumped 7.3 percent to HK$22.25. The company will sell 120.3 million shares at HK$22.55 each to finance potential acquisitions and strengthen its balance sheet.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.