Asian Stocks Advance on Signs Global Recovery Is Strengthening

By Shani Raja and Masaki Kondo

Aug. 24 (Bloomberg) -- Asian stocks rose, with the MSCI Asia Pacific Index advancing the most in three months, after sales of existing homes in the U.S. surged by a record and China Construction Bank Corp. reported higher-than-estimated profit.

BHP Billiton Ltd., the world’s biggest mining company, gained 4.3 percent in Sydney after copper and oil prices climbed in New York. China Construction Bank rose 2.6 percent in Hong Kong. James Hardie Industries NV, the largest supplier of siding to U.S. homes, added 6.9 percent in Sydney. In Tokyo Canon Inc., the world’s biggest maker of digital cameras, surged 6.3 percent.

“The fundamentals of the global economy and corporate earnings are improving, supporting the resilience of the market,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $91 billion. “The housing report confirmed the U.S. is clearly on a path to recovery.”

The MSCI Asia Pacific Index rose 2.5 percent to 113.40 as of 7:20 p.m. in Tokyo, the steepest increase since May 19. Almost nine times as many stocks gained as retreated, and all 10 industry groups climbed, led by commodities producers.

Japan’s Nikkei 225 Stock Average added 3.4 percent to 10,581.05, with only 6 stocks declining. All Asian benchmark gauges advanced, led by a 5.1 percent gain in the Philippines.

In New York, the Standard & Poor’s 500 Index climbed 1.9 percent on Aug. 21 to a level not seen since Oct. 6. September futures for the S&P 500 added 0.4 percent today. Purchases of existing U.S. homes jumped 7.2 percent in July, the most since the tallies began in 1999, according to the National Association of Realtors.

Global Recovery?

James Hardie climbed for the first time in four days, adding 6.9 percent to A$7.14 in Sydney.

The global economy is “beginning to emerge” from recession after “aggressive” action by central banks and governments, Federal Reserve Chairman Ben S. Bernanke said Aug. 21. He made the comments in a speech at the Kansas City Fed’s annual meeting of policy makers in Jackson Hole, Wyoming.

BHP added 4.3 percent to A$38.18 after copper futures climbed 5.1 percent in New York on Aug. 21, the steepest gain since June 1. Rio Tinto Group, the world’s third-biggest mining company, advanced 4.7 percent to A$59.98.

Komatsu Ltd., the world’s second-largest maker of construction machinery, rose 2.7 percent in Tokyo, and Mitsubishi Corp., a Japanese trading company that gets more than a third of its sales from commodities, advanced 3.9 percent.

Oil Stocks Rise

Oil traded near a 10-month high in New York today on speculation demand will increase as the global economy emerges from the deepest recession since World War II.

Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, rose 5.3 percent to A$49.08. Also in Sydney, Santos Ltd., an explorer seeking to develop three liquefied- natural-gas projects, climbed 4.8 percent. Inpex Corp., Japan’s biggest energy explorer, surged 5.4 percent to 758,000 yen.

Wilmar International Ltd., the world’s largest trader of palm oil, climbed 5.4 percent, leading gains in Singapore, after the ingredient climbed to its highest level since Aug. 14.

Commodities stocks in the S&P 500 are trading on average at 33.1 times this year’s estimated earnings and at 17.7 times next year’s profits, the widest gap among the gauge’s 10 industry groups, according to data compiled by Bloomberg.

Australian banks rallied on speculation a recovery will reduce loan losses and spur credit growth. National Australia Bank Ltd., the nation’s largest by assets, climbed 3.9 percent to A$26.68. Australia & New Zealand Banking Group Ltd., Australia’s fourth-biggest lender, gained 4.1 percent to A$19.81.

Asian Valuations

China Construction Bank Corp., the nation’s second largest, rose 2.6 percent to HK$5.99 in Hong Kong after first-half profit beat analysts’ estimates on higher fee income and lower operating costs and bad-loan provisions.

Shares on the MSCI Asia Pacific Index traded at 23.7 times their estimated net income on Aug. 21, the lowest level in a month. The gauge dropped 3.2 percent last week, the most since the five days ended June 19, on concern China will curb bank lending, hampering growth.

“We see some signs confirming that the real economy is starting to get out of the period of freefall,” European Central Bank President Jean-Claude Trichet said on Aug. 22 at the Jackson Hole symposium. This “does not mean at all that we do not have a very bumpy road ahead of us.”

Among stocks that fell, WorleyParsons Ltd., Australia’s biggest engineering company, dropped 3.8 percent to A$25.83 in Sydney. The company forecast full-year profit will decline from a record on project delays. DUET Group fell 2.2 percent to A$1.54 after Credit Suisse Group AG cut the Australian energy asset investor’s stock rating to “neutral.”

Japanese Exporters

Hyundai Motor Co., South Korea’s largest automaker, climbed 4.4 percent to 107,500 won, after the company named Chung Eui Sun, the only son of the company’s chairman, vice chairman in charge of planning and sales.

Japanese exporters got a boost from the strengthening dollar, which lifts the value of their overseas sales when converted into their home currency. The dollar gained to about 94.93 yen at today’s close of Tokyo trading from 93.77 at close on Aug. 21.

Canon, the world’s biggest maker of digital cameras and which gets a third of its sales from the Americas, added 6.3 percent to 3,720 yen. Honda Motor Co., a carmaker that generates more than half its sales in North America, gained 3.2 percent to 3,050 yen, and bigger rival Toyota Motor Corp. rose 2.3 percent to 4,070 yen. BHP, Toyota and Canon were the biggest contributors to the MSCI Asia Pacific Index’s increase.

“Japanese exporters are discounted as investors are wary of U.S. consumer spending,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo. “The home-sales report will likely help narrow this discount.”

Yakult Honsha Co. jumped 9.8 percent to 2,295 yen in Tokyo after a report in the Nikkei newspaper speculated that profit at the Japanese maker of soft drinks may gain on overseas sales.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.