By Masaki Kondo
Oct. 26 (Bloomberg) -- Asian stocks gained for a second day, led by automakers and consumer companies, after Toyota Industries Corp. reported an unexpected profit and South Korea’s economy grew at the fastest pace in seven years.
Toyota Industries, a parts manufacturer controlled by Toyota Motor Corp., jumped 7.4 percent in Tokyo, while Toyota Motor, the world’s biggest carmaker, rose 1.7 percent. JTekt Corp., another Toyota affiliate, climbed 3.4 percent after posting a narrower-than-estimated loss. Kia Motors Corp., South Korea’s No. 2 carmaker, added 1.9 percent after Credit Suisse Group AG upgraded the stock. Lotte Shopping Co. gained 1.6 percent after posting a 19 percent gain in third-quarter profit.
The MSCI Asia Pacific Index advanced 0.5 percent to 120.12 as of 5:51 p.m. in Tokyo, with four stocks rising for every three that fell. The gauge has climbed 70 percent from a five- year low on March 9 amid signs the global economy is bouncing back from its worst slump since World War II.
“Companies’ desperate efforts to cut costs have resulted in a lower break-even point, and we’re about to see these positive effects in coming earnings reports,” said Hisakazu Amano, who helps oversee the equivalent of $19 billion at T&D Asset Management Co.
Japan’s Nikkei 225 Stock Average rose 0.8 percent. The Kospi Index advanced 1 percent in Seoul after the central bank said the nation’s gross domestic product grew 2.9 percent in the third quarter from the preceding three months.
Australia’s S&P/ASX 200 Index lost 0.6 percent, with BHP Billiton Ltd. falling 1.2 percent after oil prices declined. Hong Kong and New Zealand markets are closed for holidays.
Toyota Industries
Among shares that slumped, Shin-Etsu Chemical Co. declined 2 percent in Tokyo after reporting a 65 percent tumble in first- half earnings. Acom Co. dropped 4 percent after Japan’s largest consumer lender by market value cut its dividend and reported first-half profit that missed its estimate.
Futures on the Standard & Poor’s 500 Index added 0.4 percent. The gauge lost 1.2 percent in New York on Oct. 23 as lower oil prices drove down Exxon Mobil Corp. and Schlumberger Ltd. Capmark Financial Group Inc., the lender owned by companies including Goldman Sachs Group Inc. and KKR & Co., filed for bankruptcy protection yesterday in the U.S.
Toyota Industries, 24 percent owned by Toyota Motor, jumped 7.4 percent to 2,530 yen in Tokyo. In a preliminary earnings statement, the company reported 200 million yen ($2.2 million) in net income for the six months to Sept. 30, compared with its forecast for a loss of 9.5 billion yen.
Kia Upgrade
The unexpected profit “was attributable to brisk sales in the auto parts segment,” Arifumi Yoshida, an analyst at Citigroup Inc., wrote in a report on Oct. 23. The company’s earnings “also raised expectations about results announcements from Toyota affiliates scheduled for next week.”
JTekt, 23 percent owned by Toyota, added 3.4 percent to 1,054 yen. Its six-month loss was probably 32 percent narrower than it had forecast because of cost cuts, according to a preliminary earnings statement from the company.
Toyota Motor added 1.7 percent to 3,650 yen and Honda Motor Co., which gets 47 percent of its sales in North America, climbed 3.4 percent to 2,900 yen. Both were the biggest contributors to the MSCI Asia Pacific Index’s advance.
Kia Motors added 1.9 percent to 18,650 won after Credit Suisse lifted the stock to “neutral” from “underperform.” Hyundai Motor Co., South Korea’s largest carmaker, climbed 4.1 percent to 114,000 won.
South Korean Growth
Lotte Shopping, the country’s largest operator of department stores, rose 1.6 percent to 326,500 won. The company’s third-quarter net income increased 19 percent as margins improved at its discount stores.
South Korea’s third-quarter gross domestic product rose 2.9 percent from the previous quarter, the central bank said today. That was the fastest pace since the first quarter of 2002 and compared with the 1.9 percent growth estimated by economists.
This month, reports showed an export decline slowed in China and U.S. service industries grew for the first time in a year. Amid signs the global economy is improving, Australia’s central bank unexpectedly raised its benchmark rate on Oct. 6 and has signaled further increases in coming months.
Shares on the MSCI Asia Pacific Index traded at an average of 23 times estimated earnings, compared with 18 times for the S&P 500 and 16 times for Europe’s Dow Jones Stoxx 600 Index. Higher valuations on Asian equities have caused concern among investors including T&D’s Amano about whether the current share prices can be justified.
Oil Producers Drop
“There is a doubt as to whether the fundamentals of the global economy and company earnings will improve as fast as share prices indicate,” he said. “It seems to me that the stock market is ahead of an actual fundamental improvement.”
BHP declined 1.2 percent to A$39.73, while Woodside Petroleum Ltd. lost 1.8 percent to A$50.85 in Sydney. Inpex Corp., Japan’s largest oil and gas explorer, fell 1.3 percent to 791,000 yen. Crude oil for December delivery declined 0.5 percent, adding to a 0.9 percent drop in New York on Oct. 23.
Shin-Etsu, the world’s largest maker of silicon wafers used in semiconductors, retreated 2 percent to 5,310 yen and was the second-biggest drag on MSCI’s Asian equity gauge after BHP. Net income tumbled 65 percent in the six months to Sept. 30. The global economy was still in a “severe” situation, the company said, refraining from giving a full-year forecast.
Mitsubishi UFJ
Acom, a consumer lender 37 percent owned by Mitsubishi UFJ Financial Group Inc., fell 4 percent to 1,282 yen. The company said first-half net income was 85 percent lower than its forecast on a preliminary basis and slashed its planned annual dividend by 83 percent. Citigroup reduced its 12-month share- price estimate on the stock by 43 percent to 706 yen.
Stocks on the MSCI Asia Pacific Index trade at the equivalent of 2.3 percent of the dividends the companies have paid during the past 12 months, the lowest level since June 9, 2008, according to data compiled by Bloomberg.
Hitachi High-Technologies Corp., a trader of electronics goods, dived 14 percent to 1,589 yen and was the biggest loser on the MSCI World Index. The company widened its full-year loss forecast by 11 percent after posting a loss in the first half.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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