Asian Stocks Rise, Led by Mitsubishi, Shipping Lines; HTC Gains

By Jonathan Burgos and Masaki Kondo

May 20 (Bloomberg) -- Asian shares rose, driving the MSCI Asia Pacific Index to a seven-month high, as oil traded above $60 a barrel and Goldman, Sachs & Co. said it was turning more positive on the transportation sector.

Mitsubishi Corp., a trading house that gets more than half its profit from commodities, climbed 5 percent in Tokyo as Goldman Sachs said stocks and commodity prices have bottomed. China Shipping Container Lines Co., the country’s No. 2 cargo- box carrier, jumped 4.7 percent in Hong Kong. Handset maker HTC Corp. surged 4.9 percent in Taipei on optimism it will benefit from increased sales in Japan.

The MSCI Asia Pacific Index rose 0.5 percent to 99.83 at 7:15 p.m. in Tokyo, the highest level since Oct. 6. Japan’s Nikkei 225 Stock Average advanced 0.6 percent even after a government report showed the nation’s economy shrank by a record last quarter, triggering a gain in the yen and dollar.

Markets in China, Hong Kong, Indonesia, India, and Pakistan declined, while all others advanced.

“Risk appetite is coming back,” Khiem Do, head of the multi-asset group at Baring Asset Management (Asia) Ltd. in Hong Kong, which oversees $7 billion, told Bloomberg Television today. “There’s greater optimism about the green shoots of economic recovery around the world.”

T&D Holdings Inc., Japan’s biggest life insurer, slumped 15 percent after posting a wider-than-estimated full-year loss. Billabong International Ltd., Australia’s largest surfwear maker, tumbled 17 percent after a share sale.

Futures on the Standard & Poor’s 500 Index added 0.3 percent. The gauge dropped 0.2 percent in New York yesterday as a Commerce Department report showed housing starts sank 13 percent in April, while economists had expected an increase.

Brokerage Upgrade

Goldman Sachs upgraded Mitsubishi to “buy” and lifted its view on Japanese trading houses to “attractive” on expectations growth in China will support demand for commodities.

Mitsubishi jumped 5 percent to 1,744 yen in Tokyo. Mitsui & Co., Mitsubishi’s closest rival, rose 5.9 percent to 1,176 yen.

“Negatives are fading, as the bottoming out of global stock markets is bringing the asset deflation trend to a halt, while commodity prices have also bottomed,” Goldman Sachs analysts Kenichiro Yoshida and Kazuhisa Mori wrote in a report dated yesterday.

The MSCI Asia Pacific Index had its biggest weekly decline in two months last week amid concern the rally since March had overpriced earnings prospects. Companies on the gauge are valued at an average 1.4 times the book value of assets, the highest since Oct. 3, according to data compiled by Bloomberg.

Crude oil for July delivery rose as much as 1.7 percent to $60.65 a barrel on the New York Mercantile Exchange after a U.S. industry report showed crude inventories declined and a fire at a Texas refinery curbed production. Crude closed at the highest since Nov. 10 yesterday.

Shipping Companies

Goldman Sachs raised its rating on the container-ship industry to “attractive” from “neutral” and upgraded Mitsui O.S.K. to “buy” from “neutral.” The brokerage lifted its share-price forecast for Pacific Basin by 20 percent.

Kawasaki Kisen Kaisha Ltd., Japan’s No. 3 shipping line, added 4.7 percent to 404 yen. The Baltic Dry Index, a measure of shipping costs for commodities, jumped for a 13th-straight session to a level not seen since Oct. 8.

China Shipping Container Lines jumped 4.7 percent to HK$2.23. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 shipping company, gained 2.1 percent to 633 yen. Pacific Basin Shipping Ltd., Hong Kong’s largest operator of commodity vessels, added 2 percent to HK$4.67.

“Shares of companies that rely on demand in emerging markets, such as trading houses, show resilience, reflecting growth prospects for China’s economy,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees the equivalent of $9.3 billion.

Shipments Rebound

Singapore’s shipments to China jumped 29 percent in March from February, and those from Japan, South Korea and Taiwan also increased. The Purchasing Manager’s Index rose to a seasonally adjusted 53.5 in April from 52.4 in March, China’s Federation of Logistics and Purchasing said on May 1. A reading above 50 indicates an expansion.

“Demand for resources looks likely to rebound and investors are willing to buy commodity-related companies on expectations for an earnings recovery,” said Hiroichi Nishi, general manager at Nikko Cordial Securities Co.

HTC climbed 4.9 percent to NT$513. The stock surged 6.3 percent yesterday after NTT DoCoMo Inc., Japan’s largest mobile- phone operator, said that it plans to sell a HTC handset that uses Google Inc.’s Android software in Japan.

Billabong Shares

“The DoCoMo sale does help,” said Kevin Chang, an analyst at Citigroup Inc. “More importantly, with Taiwan’s bull market, investors are looking for tech shares to buy.” Taiwan’s Taiex Index surged 16 percent in the month through yesterday amid optimism closer ties with China will boost economic growth.

T&D Holdings slumped 15 percent to 2,760 yen. The company reported a loss of 89.1 billion yen ($931 million) in the 12 months ended March 31, compared with a 36.7 billion yen profit the previous year. Nomura Holdings Inc. downgraded T&D’s stock to “reduce” from “buy” after the results, which compared with a February forecast for an 84 billion yen loss.

Australia’s Billabong tumbled 17 percent to A$8.45. The company sold about A$230 million ($177 million) in new stock to institutional holders at A$7.50 a share.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.