Asian Stocks Climb on Commodity Prices, Australian Confidence

By Patrick Rial and Masaki Kondo

June 10 (Bloomberg) -- Asian stocks rose for the first time in three days, as higher metal and oil prices boosted commodity companies and the biggest gain in Australian consumer confidence in 22 years added to evidence the global recession is easing.

Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, jumped 9.7 percent, while Mitsubishi Corp., a trading company that gets more than half its profit from commodities, climbed 5.2 percent in Tokyo. David Jones Ltd., Australia’s No. 2 department store chain, surged 5.4 percent as a consumer sentiment index showed the country’s optimists outnumbered pessimists for the first time since January 2008.

“Investors are focusing more on the possibility that the economy is emerging from its worst period,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees the equivalent of $7.7 billion. “Improved sentiment is resulting in this resilient market.”

The MSCI Asia Pacific Index gained 2.1 percent to 104.25 as of 1:48 p.m. in Tokyo, following a two-day, 1.2 percent drop. The gauge has surged 48 percent from a five-year low on March 9 as equities from Mumbai to Shanghai rallied on rising confidence the worst of the global recession is over.

Japan’s Nikkei 225 Stock Average rose 1.8 percent as Mitsui O.S.K. Lines Ltd., Japan’s second-biggest bulk shipper, surged 5.3 percent after brokerages recommended buying the shares. Taiwan Semiconductor Manufacturing Co. climbed 2.7 percent after saying the worst is over for the global chip industry.

South Korea’s retailers rallied after Shinsegae Co. reported higher sales. Stocks climbed in all Asian markets except Vietnam. China’s CSI 300 Index rose 0.5 percent to the highest since Aug. 1 as a report showed consumer prices fell for a fourth month, making it easier for the government to keep interest rates low.

Higher Valuations

Futures on the Standard & Poor’s 500 Index rose 0.4 percent. Most U.S. stocks rose yesterday, lifting the S&P 500 up by 0.4 percent as a better-than-estimated forecast at Texas Instruments Inc. spurred gains in technology companies.

The three-month stock rally has driven the average valuations of companies on the MSCI Asia Pacific Index to 1.5 times the book value of assets, the highest since Sept. 26. Analyst profit forecasts have been increasing since the end of March, according to data compiled by Bloomberg. Nomura Holdings Inc. yesterday narrowed its estimate for how much profit at Japan’s non-financial companies will decline in fiscal 2009.

Fortescue soared 9.7 percent to A$3.41 in Sydney. Mitsubishi Corp. added 5.2 percent to 1,974 yen. BHP Billiton Ltd., the world’s largest mining company and Australia’s top oil producer, jumped 3.3 percent to A$37.70.

Best Performers

Crude oil rose 2.8 percent to $70.01 a barrel yesterday in New York, the highest settlement since Nov. 4. A gauge of six metals jumped 3.8 percent in London, the most since June 1. Copper surged 5 percent in New York.

Measures of energy and material stocks have been the top performers among the MSCI Asia Pacific Index’s 10 industry groups in the past month on speculation demand for commodities will increase as global growth picks up.

Signs of a global recovery have increased in recent weeks, fueling the stock rally since March. Australia unexpectedly reported growth in its economy last week, while Japan’s government two weeks ago raised its view of the economy for the first time in three years.

The International Monetary Fund said in April it expects Asia’s developing markets to grow 4.8 percent in 2009, compared with a global contraction of 1.3 percent.

Optimists Increase

An Australian consumer sentiment index compiled by Westpac Banking Corp. and the Melbourne Institute that was released today showed an increase of 12.7 percent in June from the previous month to 100.1 points. It’s the first time since January 2008 that the index was above 100, indicating optimists outnumber pessimists.

David Jones climbed 5.4 percent to A$4.11. Commonwealth Bank of Australia, the nation’s second-biggest lender, added 2 percent to A$37.73. Harvey Norman Holdings Ltd., Australia’s biggest electronics retailer, climbed 2 percent to A$3.09.

Mitsui O.S.K. rallied 5.3 percent to 690 after Osuke Itazaki, an analyst at Credit Suisse Group AG and Deutsche Bank AG’s Seigo Ando recommended investors buy the shares.

“Any short-term reduction in share prices is an investment opportunity,” Itazaki wrote in a report. “If the March 2010 fiscal year marks the bottom for earnings, then there is a strong possibility of an upturn in the basic share price trend.”

Shippers Gain

Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, jumped 5.9 percent to 447 yen, while Nippon Yusen K.K., the largest, rose 4.1 percent to 455 yen, after Itazaki gave “outperform” ratings to both.

In Taipei, Taiwan Semiconductor, the world’s largest custom-chip maker, climbed 2.9 percent to NT$57.70 as comments made by Chairman Morris Chang at the company’s annual shareholder meeting fueled optimism industry demand will pick up.

United Microelectronics Corp., the world’s second-biggest maker of custom semiconductors, gained 3.6 percent to NT$12.85. Samsung Electronics Co., the world’s largest computer memory chipmaker, jumped 3.5 percent to 585,000 won.

Shinsegae, which runs South Korea’s biggest discount-store chain, climbed 6.9 percent to 472,500 won after saying sales in May rose 20 percent. Lotte Shopping Co., South Korea’s biggest department-store chain, added 6.4 percent to 251,000 won.

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