Asian Stocks Climb as Federal Reserve Says Recession Is Easing

By Patrick Rial and Shani Raja

Aug. 13 (Bloomberg) -- Asian stocks rose, driving the MSCI Asia Pacific Index to its biggest gain this month, after the U.S. Federal Reserve said the recession is easing and pledged to keep interest rates low.

James Hardie Industries NV, the No. 1 seller of home siding in the U.S., surged 9.9 percent in Sydney. Commonwealth Bank of Australia, the nation’s largest lender, gained 4.9 percent after Macquarie Group Ltd. lifted its recommendation on the stock, citing the potential for an earnings recovery. Billionaire Li Ka-shing’s Hutchison Whampoa Ltd. and Cheung Kong (Holdings) Ltd. advanced more than 1 percent in Hong Kong on better-than- estimated earnings.

“With earnings and economic data coming in better than expected, there’s an element of panic buying going on,” said Prasad Patkar, who helps manage the equivalent of $1.2 billion at Platypus Asset Management in Sydney. “The market’s full of reluctant bulls praying for the market to pull back because they want to deploy cash at better levels.”

The MSCI Asia Pacific Index gained 1.6 percent to 112.92 as of 3:56 p.m. in Tokyo, the biggest advance since July 31. The gauge has climbed 60 percent from a five-year low on March 9 amid speculation the global economy is recovering. Stocks in the measure are valued at an average 24.5 times estimated profit, compared with 17 times for the MSCI World Index.

Japan’s Nikkei 225 Stock Average added 0.8 percent. Citizen Holdings Co. climbed 4.7 percent after posting a smaller-than- estimated loss. Kawasaki Heavy Industries Ltd. climbed 6.9 percent after the Nikkei newspaper said Vietnam will use Japan’s bullet-train technology. Indonesia’s PT Bumi Resources rose 6 percent as oil and commodities prices climbed.

Low Interest Rates

In Hong Kong, Hutchison Telecommunications International Ltd. sank 8.1 percent on plans to sell a stake in an Israeli company, while Tencent Holdings Ltd., the operator of China’s biggest Internet-chat service, climbed 4.8 percent to a record on higher earnings.

Futures on the Standard & Poor’s 500 Index added 0.5 percent. The gauge climbed 1.2 percent yesterday as the Fed said the economy is “leveling out” and that the benchmark interest rate will stay “exceptionally low” for an “extended period.” The Fed’s Open Market Committee left the rate between zero and 0.25 percent after a two-day meeting.

James Hardie soared 9.9 percent to A$5.55. The stock also rose after Toll Brothers Inc., the biggest U.S. luxury home builder, posted sales that topped estimates yesterday.

Hon Hai Precision Industry Co., the world’s No. 1 contract electronics company and maker of Apple Inc.’s iPhone, advanced 3.8 percent to NT$110 in Taipei. Hyundai Motor Co., South Korea’s biggest automaker, added 2.8 percent to 92,900 won after saying it expects to boost sales in the U.S.

U.S. Recovery

“The Fed’s commitment to a low interest rate eased concern higher borrowing costs will hamper the U.S. economic recovery,” said Mitsushige Akino, who oversees the equivalent of $624 million at Ichiyoshi Investment Management Co.

Denso Corp., Japan’s largest maker of auto parts and a supplier to U.S. carmakers, jumped 4.5 percent to 2,905 yen after Mitsubishi UFJ Financial Group Inc. raised the stock to “strong outperform.”

Commonwealth Bank rose 4.9 percent to A$47.53. The shares were raised to “neutral” from “underperform” by Tom Quarmby, an analyst at Macquarie. The bank reported an 11 percent decline in second-half profit yesterday, beating analyst estimates.

Westpac Banking Corp. rose 3.9 percent to A$24.25, while National Australia Bank Ltd. added 4.3 percent to A$26.95.

Beating Estimates

Hutchison, billionaire Li’s biggest company, gained 1.3 percent to HK$57.60, while Cheung Kong, Hutchison’s largest shareholder and the world’s second-largest real estate developer, added 1.2 percent to HK$97.05 after their better-than-estimated profit reports.

Citizen gained 4.7 percent to 534 yen. The company reported a 1.3 billion yen operating loss yesterday for the three months to June 30. The watchmaker’s electronic device division and cost-cutting efforts are performing better than predicted, according to JPMorgan Chase & Co., which has an “overweight” rating on the stock.

A third of the 477 companies in the MSCI Asia Pacific Index that have reported quarterly results in the latest earnings season have beaten analysts’ profit estimates, while 17 percent have missed, according to data compiled by Bloomberg.

That’s helped the benchmark rise 9.3 percent since the end of June.

Train-related stocks in Japan gained after the Nikkei newspaper reported Vietnam Railways Corp. will use the country’s bullet-train technology for a planned link connecting Hanoi and Ho Chi Minh City. The Vietnamese government aims to build the line in sections and start running high-speed trains by 2020, the report said.

Energy Stocks Gain

Kawasaki Heavy, which makes high-speed trains, surged 6.9 percent to 263 yen, the steepest gain in the Nikkei 225. Kinki Sharyo Co., a rival producer, advanced 8.7 percent to 913 yen.

A gauge of the MSCI Asia Pacific Index’s energy stocks posted the biggest gain of the broader measure’s 10 industry groups after crude oil added 1 percent in New York yesterday, breaking a four-day losing streak. Futures rose 0.9 percent in after-hours trading. Copper jumped 3.2 percent yesterday.

Bumi Resources, Asia’s largest exporter of power-station coal, jumped 6 percent to 3,100 rupiah. Origin Energy Ltd., an Australian oil and gas explorer, rose 2.7 percent to A$15.07. Fortescue Metals Group Ltd., Australia’s No. 3 iron-ore producer, added 2.3 percent to A$4.45.

Hutchison Telecommunications, the emerging-market phone carrier controlled by billionaire Li Ka-shing, sank 8.1 percent to HK$1.86 after the company agreed to sell its controlling stake in Israel’s Partner Communications Ltd. HSBC Holdings Plc slashed to shares to “underweight” from “overweight” saying the deal limits the potential for a special dividend payout.

Tencent rallied 4.8 percent to HK$118.50. The company reported an 85 percent increase in second-quarter profit yesterday.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.