By Patrick Rial and Shani Raja
Sept. 11 (Bloomberg) -- Asian stocks rose and the MSCI Asia Pacific Index had its biggest weekly advance since July after Chinese economic data beat economist estimates. Japanese shares dropped on a worse-than-expected economic growth report.
Poly Real Estate Group Co., China’s second-largest developer by market value, advanced 3.3 percent in Shanghai after government reports showed industrial production and investment growth accelerated. Cnooc Ltd., China’s third-biggest oil company, rose 2.6 percent in Hong Kong as crude oil rose to the highest in more than a week. Dentsu Inc., Japan’s largest advertising agency, dropped 2.7 percent after the government revised economic growth figures lower and the yen strengthened.
The MSCI Asia Pacific Index added 0.3 percent to 117.55 as of 3:36 p.m. in Tokyo. It advanced 4.2 percent in the past five days, the most since the week ended July 24. The gauge has surged 60 percent in the past six months as economies recovered from the first global recession since World War II.
“There’s a lot of expectation priced in after the recent rally,” said Matt Riordan, who helps manage about $4.1 billion at Paradice Investment Management in Sydney. “Still, the economic data globally and earnings have tended to surprise on the upside.”
China’s Shanghai Composite Index rose 2.2 percent, while Hong Kong’s Hang Seng Index climbed 1.1 percent after the Chinese statistics bureau said industrial production increased 12.3 percent in August from a year earlier. Japan was the only market in Asia to drop, dragging the Nikkei 225 Stock Average down by 0.7 percent.
Oil Forecast
In Tokyo, IHI Corp., a Japanese maker of heavy machinery, gained 2.6 percent after Goldman Sachs Group Inc. said a return to profitability in its energy plant division indicates the shares are poised to rise. Nippon Electric Glass Co. climbed 2 percent after a rival lifted its sales outlook. KB Financial Group Inc. rose to a record in Seoul on a brokerage upgrade.
Futures on the Standard & Poor’s 500 Index slipped 0.1 percent. Treasuries declined, sending the yield on the 10-year note up by two basis points, before an industry report that economists predict will show U.S. consumer confidence improved for the first time in three months.
The S&P 500 added 1 percent yesterday after the Labor Department reported the number of Americans filing first-time claims for unemployment benefits dropped more than economists had estimated. Treasury Secretary Timothy Geithner also said the government is preparing to withdraw some of its support for financial markets.
China’s Premier Wen Jiabao signaled he will maintain unprecedented government spending because China’s economic rebound “is unstable.” The Shanghai Composite Index has climbed 61 percent this year amid surging loan growth.
Chinese Economy
Poly Real Estate advanced 3.3 percent to 25.73 yuan. Hitachi Construction Machinery Co., which generated the largest portion of its revenue from China last quarter, gained 2.6 percent to 1,996 yen. Gome Electrical Appliances Holdings Ltd., China’s second-biggest electronics retailer by market value, jumped 2.7 percent to HK$2.30 in Hong Kong.
The climb in August industrial production was higher than the 10.8 percent increase the previous month and beat the 11.8 percent estimate of economists surveyed by Bloomberg News. Urban fixed-asset investment for the eight months to Aug. 31 rose 33 percent. Economists in the survey expected 32.7 percent.
“It’s positive news overall,” Liu Hong, Shanghai-based senior portfolio manager at Fortis Haitong Investment Management Co., which oversees about $7.9 billion in assets. “Most of the data is better than expected.”
Oil Demand
China Mobile Ltd., the world’s largest mobile phone operator by subscribers, rose 2.3 percent to HK$81.45 after the company’s chairman said the company is already working on selling shares on the mainland stock market.
Cnooc rose 2.6 percent to HK$11.06, while PetroChina Co., China’s largest oil producer, gained 2.1 percent to HK$9.23. In Sydney, Santos Ltd., Australia’s No. 3 oil and gas producer, added 1.5 percent to A$15.88.
The International Energy Agency increased its 2010 estimate for global demand because of stronger sales in North America and China, helping crude oil futures to advance 0.9 percent to the highest settlement since Aug. 28.
The MSCI Asia Pacific climbed for a sixth-straight month in August, the longest stretch of gains since the 10 months ended July 2007. Stocks on the gauge are priced at an average 1.6 times book value, up from 1 at the index’s low in March, according to Bloomberg data.
Volatile Markets
Greater-than-expected profit reports have fueled the rally. Among the 642 companies on the MSCI Asia Pacific Index that reported quarterly net income in the past two months, 35 percent have beaten analyst estimates, while 21 percent have missed.
“The market has been a bit volatile lately, but some of the big money managers are increasingly putting money in, so there’s a firm bottom under it,” said Hiroaki Kuramochi, head of equity sales at Tokai Tokyo Securities Co.
Dentsu fell 2.7 percent to 2,140 yen. Nissan Motor Co., the nation’s third-largest automaker, lost 2.7 percent to 615 yen. Japan’s Cabinet Office reported today that the country’s economy grew at a 2.3 percent annual rate in the second quarter, lower than the 3.7 percent expansion originally estimated.
Stocks also fell as the yen strengthened to as much as 91.24 versus the dollar, the highest since February, depressing the local value of Japanese companies’ overseas sales.
“It has yet to be seen if the global economy will be able to stand on its own legs after the effects of inflated fiscal and monetary supports fade away,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion in Tokyo.
Government Support
Haseko Corp., one of Japan’s largest construction companies, tumbled 22 percent to 94 yen, the biggest plunge since 2002, after saying it will issue moving-strike convertible bonds, prompting Credit Suisse Group AG to cut the shares to “neutral” from “outperform.”
IHI rose 2.6 percent to 196 yen. Kunio Sakaida at Goldman Sachs lifted the stock’s target price by 16 percent to 220 yen, as the risk of losses in its energy plant business are diminishing, while the company’s nuclear and natural gas businesses have a strong medium-term outlook.
Nippon Electric Glass, the world’s third-biggest maker of glass for flat-panel televisions, jumped 2 percent to 956 yen. Rival Asahi Glass Co. added 2.1 percent to 780 yen.
Corning Inc., the world’s biggest maker of glass for liquid-crystal display panels, said yesterday fourth-quarter orders probably will be stronger than forecast as sales of flat- screen television pick up in the U.S. and Japan.
KB Financial added 4.1 percent to 58,800 won. The owner of South Korea’s biggest bank was lifted to “outperform” from “neutral” by Macquarie Group Ltd.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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