By Shani Raja
Oct. 8 (Bloomberg) -- Asian stocks advanced for a third day, driving the MSCI Asia Pacific Index to a two-week high, after Australian employers unexpectedly added workers last month and Alcoa Inc. earnings beat analyst estimates.
National Australia Bank Ltd. climbed 4.4 percent after the statistics bureau said the country’s jobless rate fell. Alumina Ltd., Alcoa’s joint-venture partner, climbed 4.6 percent in Sydney. Mitsui O.S.K. Lines Ltd., operator of the world’s largest merchant fleet, rose 5.8 percent on a Bank of America- Merrill Lynch upgrade. The dollar fell as optimism the global economy is picking up boosted demand for higher-yielding assets.
The MSCI Asia Pacific Index added 1.3 percent to 118.57 as of 3:50 p.m. in Tokyo, set to close at the highest level since Sept. 24. The gauge has climbed 68 percent from a five-year low on March 9 as better-than-estimated economic and earnings reports boosted speculation the global economy is recovering from the worst slowdown since World War II.
“Valuations are no longer particularly cheap in Asia, but they don’t appear to be overly excessive either,” said Robert Horrocks, who helps manage $9.9 billion including Asian stocks at Matthews International Capital Management LLC in San Francisco. “Markets now are going to be driven by the ability of companies to sustain a reasonable level of growth.”
Australia’s S&P/ASX 200 Index climbed 1.6 percent, the biggest advance in the region, as the statistics bureau said in Sydney today that the number of people employed rose 40,600 from August. The median estimate of economists surveyed by Bloomberg was for a decline of 10,000.
Sino Land, SJM
Japan’s Nikkei 225 Stock Average added 0.3 percent, while South Korea’s Kospi Index gained 1.1 percent. China’s markets resume trading tomorrow after an eight-day holiday.
Hong Kong’s Hang Seng Index rose 1.1 percent, led by Sino Land Co.’s 3.2 percent advance after it was upgraded at Goldman Sachs Group Inc. Casino company SJM Holdings Ltd. increased 3.8 percent as it was rated “overweight” in new coverage by Morgan Stanley. Singapore Airport Terminal Services Ltd. added 6.3 percent after BNP Paribas SA recommended the stock.
Futures on the U.S. Standard & Poor’s 500 Index climbed 1 percent. The gauge added 0.3 percent yesterday as Alcoa, the largest U.S. aluminum producer, reported third-quarter profit, while analysts had estimated a loss. The company was the first in the Dow Jones Industrial Average to release results.
“The chances are high that other U.S. companies will follow Alcoa in reporting better-than-expected results and have positive impacts on markets here,” said Kenichi Hirano, general manager at Tokyo-based Tachibana Securities Co.
Rising Valuations
The seven-month stock rally has lifted the average price of stocks in the MSCI Asia Pacific Index to 1.55 times book value from 1 at the gauge’s March 9 low.
Rising investor appetite for risky assets has dragged the Dollar Index down by 10 percent in the second and third quarters of the year. The gauge, which compares the dollar with six major currencies, fell 0.6 percent today to the lowest level since Sept. 23.
National Australia, the country’s third-biggest bank by value, climbed 4.4 percent to A$31.35. Commonwealth Bank of Australia, the nation’s largest, gained 3.3 percent to A$52.97. Fairfax Media Ltd., Australia’s No. 2 newspaper owner, rose 6.7 percent to A$1.685 on optimism an economic revival will help boost advertising revenue.
Two days ago, Australia became the first country in the so- called Group of 20 nations to boost borrowing costs since the start of the credit crisis. The “risk of serious economic contraction” has passed, Glenn Stevens, governor of Australia’s central bank, said the same day.
Interest-Rate Increase
The Reserve Bank of Australia’s decision to lift the overnight cash rate target to 3.25 percent from a 49-year low of 3 percent followed the first expansion this year in U.S. service industries. Manufacturing in emerging markets increased the most in the past three months since the second quarter of 2008, according to the HSBC Emerging Markets Index of data from purchasing managers.
Alumina, Alcoa’s partner in the world’s biggest producer of the material used to make aluminum, jumped 4.6 percent to A$1.93. Alcoa’s third-quarter profit excluding certain items of 4 cents a share exceeded the average analyst estimate for a 9-cent loss as metal prices climbed and the company cut costs.
In Tokyo, Mitsui O.S.K. surged 5.8 percent to 565 yen, while Nippon Yusen K.K. gained 7.3 percent to 368 yen and Kawasaki Kisen Kaisha Ltd. advanced 7.4 percent to 365 yen.
BOA-Merrill lifted its ratings on all three shipping lines to “neutral” from “underperform.” The Baltic Dry Index, a measure of rates for shipping commodities, also rose 4.3 percent yesterday in London, the most in almost three months.
Hong Kong Developers
“The world economy and company earnings are on track for a recovery,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees the equivalent of $4 billion. “Once demand starts to grow faster, especially in emerging markets, earnings at shipping lines will recover.”
In Hong Kong, Sino Land added 3.2 percent to HK$15 after Goldman Sachs upgraded the stock to “buy” from “neutral,” citing an influx of mainland Chinese buyers into the city’s property market. Goldman raised its share-price target to HK$16.85 from HK$15 the report said.
Sun Hung Kai Properties Ltd. and Kerry Properties Ltd. were also named as Goldman Sachs’ top buy ideas, the report said. Sun Hung Kai gained 2 percent to HK$115, while Kerry jumped 3.5 percent to HK$41.60.
SJM, billionaire Stanley Ho’s casino holding company, increased 4.7 percent to HK$4.69. SJM has “substantial upside from new casino openings,” a Morgan Stanley report said today. The brokerage set a share-price target of HK$5.60.
Singapore Airport Terminal Services, a provider of airport ground services, added 6.3 percent to S$2.52. The stock was rated “buy” in new coverage at BNP Paribas, which cited a potential recovery in air traffic.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net
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