By Masaki Kondo
Oct. 19 (Bloomberg) -- Asian stocks advanced, led by energy and technology companies, as oil prices rose to a one-year high amid speculation data this week will show China’s economic growth gathered pace in the third quarter.
Cnooc Ltd., China’s largest offshore oil producer, added 4.2 percent in Hong Kong. Gemdale Corp., China’s fourth-largest developer by value, jumped 8.3 percent after a media report said apartment sales in the city of Shenzhen climbed. Taiwan’s Asustek Computer Inc. rose 4.9 percent after the Commercial Times said the company will report a third-quarter profit, compared with a loss the previous three months.
The MSCI Asia Pacific Index added 0.6 percent to 120.31 as of 6:01 p.m. in Tokyo. The gauge has surged 70 percent from a five-year low on March 9 amid signs the global economy is rebounding from the worst slowdown since World War II.
“The pace of the economic recovery will continue,” said Gabriel Gondard, Shanghai-based deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7.2 billion. “Investors will look to the upcoming data for clues.”
China’s Shanghai Composite Index rose 2.1 percent, while Hong Kong’s Hang Seng Index added 1.2 percent. The Topix Index gained 0.5 percent in Tokyo, led by Japan Airlines Corp. on speculation the company will receive public funds.
Among stocks that fell, Casio Computer Co., which makes cameras and mobile phones, slumped 9 percent after forecasting a loss. Fast Retailing Co., Japan’s largest casual-clothing chain, sank 3.7 percent on a downgrade at JPMorgan Chase & Co. Korea Exchange Bank declined 5 percent amid valuation concerns.
U.S. Economy
Australia’s S&P/ASX 200 Index dropped 0.9 percent as a research firm said the nation’s economic recovery will be slower than expected. Australia & New Zealand Banking Group Ltd. lost 3.4 percent.
Futures on the Standard & Poor’s 500 Index rose 0.6 percent. The gauge sank 0.8 percent on Oct. 16 as General Electric Co.’s third-quarter revenue trailed analyst estimates. Bank of America Corp. led financial shares lower after posting a $1 billion loss.
“The General Electric result disappointed the market,” said Tim Schroeders, who helps manage $1.2 billion at Pengana Capital Ltd. in Melbourne. “Investors watch it closely as a bellwether for the U.S. economy.”
Today is the 22nd anniversary of “Black Monday,” when an increase in U.S. interest rates and concerns about slowing economic growth helped spark a sell-off that dragged the S&P 500 20 percent lower and the Dow Jones Industrial Average down by 23 percent in a single day.
China Growth
Cnooc advanced 4.2 percent to HK$12.42 after crude-oil futures in New York increased 0.3 percent to $78.75 a barrel in after-hours trading, the highest since Oct. 13, 2008. PetroChina Co., China’s largest producer, gained 3 percent to HK$10.28.
China is the world’s second-largest consumer of oil. Data due Oct. 22 will probably show the country’s economy expanded 9 percent in the third quarter, the fastest pace since September 2008, according to economists’ estimates.
Gemdale surged 8.3 percent to 16.19 yuan, while market leader China Vanke Co. jumped 6.8 percent to 12.34 yuan. The China Securities Journal reported property sales in Shenzhen reached 475 units on Oct. 11, a record for this year.
Asustek, the maker of the Eee PC low-cost notebook computer, climbed 4.9 percent to NT$58 after the Commercial Times reported it will post third-quarter net income of more than NT$4 billion ($124 million), citing analysts’ estimates. The company reported a loss in the previous quarter.
Japan Airlines soared 12 percent to 113 yen and posted the biggest advance on the MSCI World Index. The carrier may receive public funds to bolster capital, the Yomiuri newspaper reported.
Reform Concern
Gains in Japan were limited after Japan’s Financial Services Minister Shizuka Kamei said he told Japan Post President Yoshifumi Nishikawa that the government had decided to scrap plans for the company’s initial public offering. The privatization of Japan Post was a cornerstone of former Prime Minister Junichiro Koizumi’s reform program.
“International investors aren’t going to like indications that the reform movement in Japan if faltering,” said Naoteru Teraoka, who helps oversee about $16 billion at Chuo Mitsui Asset Management Co.
Casio tumbled 9 percent to 692 yen, the steepest drop since March 19. The maker of G-Shock watches cited declining sales of mobile phones and digital cameras for its full-year loss forecast.
The MSCI Asia Pacific Index rose to the highest level in more than a year last week as reports showed China’s export decline slowed and Australian consumer confidence rose. The seven-month rally has driven the average price of stocks in the gauge to 1.59 times book value, compared with a one-year average of 1.31 times.
Pace of Recovery
“Investors have been extremely fast to price an earnings recovery into stocks,” said Angus Gluskie, who manages about $300 million at White Funds Management Pty in Sydney. “It’s possible some may now find themselves disappointed at the pace of the fundamental recovery.”
Fast Retailing lost 3.7 percent to 14,750 yen and traded at 5.79 times corporate net worth after JPMorgan cut its rating to “underweight” from “neutral.”
“Most of the good news is probably now discounted” in the stock price after gains in the past month, Chiaki Hirota, a JPMorgan analyst, wrote in a report on Oct. 16.
Korea Exchange Bank, controlled by U.S. buyout firm Lone Star Funds, slumped 5 percent to 14,350 won after ending last week at the highest level since June 2008. The stock’s 14-day relative strength index closed at 78 on Oct. 16, above the threshold of 70 that some investors use as a signal to sell.
Biggest Drags
Australia & New Zealand Banking, Australia’s No. 4 bank, slid 3.4 percent to AS$23.73, while Westpac Banking Corp. dropped 2.5 percent to A$26.30. The two companies were the biggest drags on the MSCI Asia Pacific Index.
While the nation’s economy “sailed through the worst of the global crisis on a sea of stimulus,” the recovery will be “softer and slower” than some expect, Chris Richardson, head of Canberra-based Access Economics, wrote in a report.
Reserve Bank of Australia Governor Glenn Stevens, who this month became the first Group of 20 policy maker to raise borrowing costs, signaled on Oct. 15 he will increase rates again as soon as next month.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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