Asian Stocks Advance as Chinese Shares Rebound; Brambles Gains

By Jonathan Burgos and Shani Raja

Aug. 20 (Bloomberg) -- Asian stocks advanced as China’s benchmark index erased yesterday’s slump, while Brambles Ltd. and QBE Insurance Group Ltd. reported better-than-estimated earnings.

Brambles, the world’s biggest supplier of pallets, and QBE, Australia’s biggest property and casualty insurer, advanced more than 3 percent in Sydney. Isuzu Motors Ltd., Japan’s third- biggest maker of commercial vehicles, rallied 5.4 percent as brokerages recommended buying Japanese automakers. PetroChina Co., the nation’s biggest oil producer, climbed 6.9 percent in Shanghai after crude-oil prices climbed.

The MSCI Asia Pacific Index gained 1.2 percent to 111.67 as of 7:24 p.m. in Tokyo. The gauge has rallied 58 percent from a more than five-year low on March 9 amid growing confidence government stimulus measures and lower borrowing costs will lift the world out of recession.

“Share markets are trying to price in a substantial recovery,” said Jason Teh, who helps manage about $2.8 billion at Investors Mutual Ltd. in Sydney. “Elements of the economy are beginning to appear to have stabilized, but we’ve been through something that hasn’t been witnessed for decades and any recovery is vulnerable to hiccups.”

Japan’s Nikkei 225 Stock Average advanced 1.8 percent to 10,383.41. Hong Kong’s Hang Seng Index climbed 1.9 percent.

China’s Shanghai Composite Index rose 4.5 percent, following yesterday’s 4.3 percent drop. The gauge briefly fell to bear-market levels yesterday, denoted by a 20 percent decline from its peak this year on Aug. 4. The measure is now down 16 percent from that high.

China Mobile Profit

Among stocks that fell, China Mobile Ltd. lost 0.2 percent in Hong Kong, erasing earlier gains after reporting earnings that missed estimates. CSL Ltd., the world’s second-biggest maker of blood plasma products, and Boral Ltd., Australia’s largest seller of building materials, sank more than 3 percent on brokerage downgrades.

Futures on the Standard & Poor’s 500 Index rose 0.4 percent. The U.S. gauge advanced 0.7 percent yesterday as energy stocks gained, while Merck & Co. led drugmakers higher after a judge upheld a patent.

The Asian gauge fell 3.4 percent this week through yesterday on concern the rally since March had outpaced growth prospects. Companies on the gauge are priced at an average 24 times estimated earnings, compared with 17 times for the S&P 500 and 14 times for the Dow Jones Stoxx 600 Index in Europe.

Reports last week showed Chinese exports dropped in July and investment growth slowed, while Australia’s statistics bureau said wage growth stalled last quarter as the worst global slump since the Great Depression drove up unemployment.

Further Improvement

“The consensus remains among investors that the global economy is on course for a recovery, but we have to see further improvement in the economy and company earnings for markets to go up higher,” said Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co., which oversees about $53 billion.

Brambles jumped 3.6 percent to A$7.15. The company said annual net income fell 30 percent to $452.6 million, exceeding the $419.2 million average of five analyst estimates. QBE rose 6.4 percent to A$22.06 after saying first-half profit climbed 19 percent on premium growth and foreign exchange gains, beating expectations of investors including White Funds Management Pty.’s Angus Gluskie.

A third of the 516 companies in the MSCI Asia Pacific Index that have reported results since early July have beaten analysts’ profit estimates, while 18 percent have missed, according to data compiled by Bloomberg.

Beating Estimates

Bank of Communications Ltd., China’s fourth-largest lender, gained 1.3 percent to HK$9.19 in Hong Kong. The company said net income for the second-quarter was little changed at 7.62 billion yuan ($1.1 billion). That’s higher than the average estimate of 7.24 billion yuan from nine analysts in a Bloomberg survey.

China’s stocks are set to rebound from this month’s plunge on prospects earnings will beat estimates and policy makers will maintain bank lending, Bank of America Corp.’s Merrill Lynch unit said. The Shanghai Composite Index has retreated 15 percent in August.

PetroChina climbed 6.9 percent to 13.88 yuan in Shanghai. Woodside Petroleum advanced 7.3 percent to A$47.53 in Sydney. Inpex Corp., Japan’s largest oil explorer, gained 2.9 percent to 721,000 yen in Tokyo.

Crude oil for September delivery rallied 4.7 percent to $72.42 a barrel in New York. U.S. oil stockpiles dropped 8.4 million barrels last week, the most since the week ended May 23, 2008, a report from the Energy Department showed.

Isuzu, Hino Motors

Isuzu climbed 5.4 percent to 197 yen after Nikko Citigroup Ltd. raised its recommendation to “hold” from “sell.” Hino Motors Ltd. advanced 5.1 percent to 391 yen after upgrades at Nikko Citigroup and Daiwa Securities.

China Mobile, the world’s biggest mobile phone carrier, lost 0.2 percent to HK$82.85 in Hong Kong, having earlier gained as much as 2.4 percent. The company reported second-quarter net income of 30.1 billion yuan ($4.4 billion), lower than the 31.1 billion yuan estimate from a Bloomberg analyst survey.

CSL slipped 3.6 percent to A$31.92 in Sydney. Citigroup Inc. cut the stock to “hold” from “buy,” saying the Australian dollar is likely to rise against the U.S. dollar and euro this year, reducing the value of sales in overseas markets. Macquarie Group Ltd. lowered CSL to “neutral” from “outperform.”

Boral plunged 7.5 percent to A$5.43. Credit Suisse Group AG cut its rating to “underperform” from “neutral.”

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