Asian Stocks Rise as Olympus, Nissan Forecasts Stoke Optimism

By Patrick Rial and Masaki Kondo

May 13 (Bloomberg) -- Asian stocks rose, resuming a two- month rally, as forecasts from Olympus Corp. and Nissan Motor Co. boosted confidence corporate earnings are recovering from the global recession.

Olympus, the world’s biggest maker of endoscopes, soared 11 percent in Tokyo after unexpectedly forecasting a return to profit this year. Nissan, Japan’s third-largest automaker, rallied 7.1 percent after predicting a narrower loss than analysts estimated. Cnooc Ltd., China’s biggest offshore oil producer, gained 6.9 percent as crude oil rose for a second day. Toyota Motor Corp., the world’s biggest automaker, fell 2.4 percent after saying it expects to cut vehicle production.

“We’ll see a difference in the pace of recovery between businesses that are carrying out deeper cost reduction and those that don’t,” said Naoki Fujiwara, chief fund manager at Tokyo- based Shinkin Asset Management Co., which oversees about $6.1 billion. “A possible earnings rebound is already fully reflected in current valuations.”

The MSCI Asia Pacific Index rose 0.7 percent to 98.57 as of 1:01 p.m. in Tokyo. The benchmark dropped yesterday, ending a six-day winning streak. The gauge has climbed 40 percent from a five-year low on March 9 on speculation the worst of the financial crisis is over.

Japan’s Nikkei 225 Stock Average added 0.6 percent to 9,353.96, while Hong Kong’s Hang Seng Index climbed 0.7 percent. All markets in Asia advanced except Australia and Vietnam.

Hitachi Ltd., Japan’s third-largest chipmaker, sank 9.7 percent on a loss forecast. Santos Ltd., Australia’s third- biggest oil and gas producer, slumped 7.5 percent in Sydney on concern a share sale will dilute the value of existing holdings. China Construction Bank Corp., the nation’s second largest, lost 1.8 percent after an investor sold stock in the company.

Record Loss

Futures on the U.S. Standard & Poor’s 500 Index added 0.4 percent even as David Walker, the former U.S. comptroller general, wrote in the Financial Times that the government should rein in the country’s finances because its AAA debt rating may be cut. The S&P 500 lost 0.1 percent yesterday.

The dollar weakened against Asian currencies today after the FT report. The yen strengthened to as much as 95.79 against the U.S. currency, the strongest level since April 28. A stronger local currency cuts the value of repatriated sales for Japanese exporters.

Olympus jumped 11 percent to 1,919 yen. The company forecast net income of 40 billion yen ($416 million) for the year ending March 2010, the company said yesterday after markets in Japan closed. Analysts expected a net loss of 9.3 billion yen, based on the median of 10 estimates compiled by Bloomberg.

Toyota Production

Nissan rose 7.1 percent to 546 yen after projecting a net loss for fiscal 2009 that was almost half the amount analysts had expected. The carmaker plans to slash 20,000 jobs in response to an industry wide slump in the U.S., traditionally Nissan’s most profitable market.

The rally in stocks in the past two months has driven the average valuation of companies on the MSCI Asia Pacific Index to 31 times reported profit, the highest level since March 30, 2004, according to data compiled by Bloomberg. Analyst estimates for earnings of companies on the stock gauge climbed in April after declining the previous year, the data show.

Toyota slumped 2.4 percent to 3,650 yen. The company expects to cut global vehicle production by 28 percent this year as the recession hammers demand, according to figures provided by Hideaki Homma, a company spokesman.

Cnooc gained 6.9 percent to HK$10.36 in Hong Kong. PetroChina Co., Asia’s biggest crude producer, gained 5.1 percent to HK$8.52. Inpex Corp., Japan’s No. 1 oil company, rose 2.8 percent to 740,000 yen.

South Korea Housing

Crude oil futures rose 0.6 percent to $58.85 a barrel in New York yesterday, after earlier climbing above $60 for the first time since Nov. 11. Oil prices climbed 1.4 percent in after-hours trading.

Hitachi lost 9.7 percent to 344 yen, the biggest slide since Feb. 2, after forecasting a net loss of 270 billion yen for this fiscal year. That was worse than the median loss predicted by analysts in a Bloomberg survey.

Santos slumped 7.5 percent to A$14.59 following a two-day trading halt. The company raised A$3 billion ($2.3 billion) in Australia’s largest share sale since November to help fund a liquefied natural gas project.

Construction Bank lost 1.8 percent to HK$4.89 after an unidentified institution sold shares worth HK$3.6 billion ($465 million), according to a document sent to fund managers. The notice came a day after news that Bank of America Corp. sold part of its stake in the Chinese bank for $7.3 billion to a group of investors.

South Korea’s GS Engineering & Construction Corp. climbed 4.6 percent to 78,100 won. Hyundai Engineering & Construction Co. added 1.9 percent to 69,400 won. BNP Paribas boosted its view on builders to “positive” from “neutral” on optimism for a recovery in South Korea’s housing market.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.