Asian Stocks Rise on South Korean Growth, Brokerage Upgrades

By Shani Raja and Jonathan Burgos

July 24 (Bloomberg) -- Asian stocks rose for a ninth day, giving the MSCI Asia Pacific Index its longest winning streak since 2004, as South Korea’s economic growth accelerated and brokerages upgraded Panasonic Corp. and Quanta Computer Inc.

Murchison Metals Ltd. surged 19 percent after saying Chinese groups were interested in helping develop an iron-ore project. Panasonic, the world’s largest manufacturer of plasma televisions, climbed 6.2 percent in Tokyo. Notebook computer maker Quanta added 5.2 percent in Taipei. Samsung Electro- Mechanics Co., which makes electronic parts, rose 1.5 percent in Seoul as a brokerage raised its share-price estimate.

The MSCI Asia Pacific Index added 0.7 percent to 107.72 as of 1:18 p.m. in Tokyo, set for its best week in two months. The gauge has gained 10 percent in the past nine days, the longest winning streak since August 2004, amid growing speculation the global economy is recovering.

“The rally has gone on longer than expected,” said Pearlyn Wong, an investment analyst at Bank Julius Baer & Co. in Singapore, which manages $350 billion. “We’ve probably seen the worst in terms of earnings but we’re still quite cautious. Valuations have priced in a recovery.”

Hong Kong’s benchmark Hang Seng Index added 0.5 percent, having earlier climbed above the 20,000 level for the first time since the September collapse of Lehman Brothers Holdings Inc. Japan’s Nikkei 225 Stock Average rose for an eighth day, gaining 1 percent. South Korea’s Kospi Index advanced 0.3 percent.

Consumer Stocks

Australia’s S&P/ASX 200 Index gained 0.9 percent. Nufarm Ltd., the country’s biggest supplier of farm chemicals, climbed 9.2 percent and New Zealand Refining Co. jumped 3.5 percent in Wellington on takeover speculation.

Consumer-staple shares were the only industry group of the MSCI Asia Pacific Index’s ten to fall amid speculation a possible tobacco tax will hurt profit at Japan Tobacco Inc. and as JPMorgan Chase & Co. downgraded Australia’s Woolworths Ltd.

Futures on the Standard & Poor’s 500 Index lost 0.5 percent. The gauge climbed 2.3 percent yesterday, as EBay Inc. and Ford Motor Co. posted better-than-estimated results. Sales of existing U.S. homes advanced 3.6 percent last month from May, surpassing the 1.5 percent gain estimated by economists.

The increased sales fanned speculation demand for resources will recover, lifting prices for metals and oil. A gauge of six metals in London rose for a ninth day yesterday, the longest winning streak since December 2005. Crude oil in New York jumped 2.7 percent yesterday to a level not seen in three weeks.

Improving Sentiment

“Global market sentiment continues to rise,” said Ben Potter, an analyst at IG Markets in Melbourne. “The collapse of the housing market started this whole crisis and its recovery is certainly needed for any sustained economic improvement.”

Murchison Metals surged 19 percent to A$1.825. Murchison’s joint venture with Mitsubishi Corp., Oakajee Port & Rail Pty, has held meetings with Chinese groups and Western Australia’s Premier Colin Barnett in China, the Perth-based company said in a statement.

Rio Tinto Group, the world’s third-biggest mining company, gained 1.2 percent to A$58.18 in Sydney, while BHP Billiton Ltd., the biggest, rose 1.5 percent to A$37.64.

The U.S. home sales and South Korean growth reports are the latest signs of a possible global economic recovery that has driven the MSCI Asia Pacific Index up by 53 percent from a more than five-year low on March 9.

South Korea’s gross domestic product rose 2.3 percent from the first quarter, when the nation skirted a recession by growing 0.1 percent, the central bank said today in Seoul. That compared with the median estimate of 2.2 percent in a Bloomberg survey and was the fastest since a 2.6 percent expansion in the last quarter of 2003.

Signs Of Stabilization

The International Monetary Fund saw signs of stabilization, Deputy Managing Director Takatoshi Kato said last month in a speech made public yesterday. Japan’s Finance Ministry yesterday said the nation’s exports decreased in June at the slowest pace of decline since December.

“We’re seeing brighter prospects for company earnings thanks to growing demand in China and government stimulus measures globally,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees the equivalent of $3.7 billion.

Panasonic climbed 6.2 percent to 1,363 yen as JPMorgan raised its rating on Japan’s largest maker of refrigerators to “overweight” from “neutral.” Quanta rose 5.2 percent to NT$67.30 after Credit Suisse upgraded its rating on the company to “outperform,” citing increasing orders for laptops.

Beating Estimates

Samsung Electro-Mechanics gained 1.5 percent to 66,800 won. Samsung Securities Co. raised its share-price estimate by 16 percent to 85,000 won, saying second-quarter profit beat its estimate. The brokerage maintained its “buy” recommendation.

SSP Co. rose 5.4 percent to 523 yen in Tokyo after the drugmaker said first-half profit beat its forecast as more efficient promotions contributed to sales.

Nufarm jumped 9.2 percent to A$10.74. The company said it was approached by China’s Sinochem Corp. about a possible takeover. Incitec Pivot Ltd., Australia’s largest fertilizer maker, rallied 8.7 percent to A$2.63.

In Wellington, New Zealand Refining advanced 3.5 percent to NZ$7.40 after two people familiar with the matter said Valero Energy Corp., the largest U.S. refiner, was considering a bid to reduce its reliance on its home market.

Japan Tobacco, the No. 3 cigarette maker globally, fell 3.4 percent to 251,200 yen. The opposition Democratic Party of Japan, which is favored in opinion polls to win next month’s election, plans to set a tobacco tax that discourages people from smoking, according to a policy document released yesterday.

Woolworths, Australia’s biggest retailer sank 1.8 percent to A$26.08. after being cut to “neutral” from “overweight” at JPMorgan.

To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net.