Asian Stocks Rise on China Growth Optimism, Higher Metal Prices

By Shani Raja

Nov. 23 (Bloomberg) -- Asian stocks rose for the first time in three days as the head of China’s top economic planning agency pledged to maintain “consistent, stable” policies to boost growth, while higher metal prices boosted mining companies.

China Construction Bank Corp., the nation’s second-biggest lender, gained 4.1 percent in Hong Kong after the comments by Zhang Ping, chairman of the National Development and Reform Commission. Newcrest Mining Ltd. added 3.2 percent in Sydney as gold prices rose to a record. James Hardie Industries NV, the top seller of home siding in the U.S., surged 6.4 percent after forecasting earnings at the top end of a range.

The MSCI Asia-Pacific excluding Japan Index added 1.1 percent to 411.72 as of 8:01 p.m. in Tokyo, with all 10 of its industry groups advancing. The gauge has risen 66 percent this year, on course for its steepest annual gain since 1993, as governments worldwide enacted spending programs and cut borrowing costs to revive economic growth.

“People remain positive that the recovery is in place,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne. “But we’re not getting carried away. Valuations are fairly reflective of a bullish economic environment, and you don’t need much in terms of softer-than- anticipated growth or a withdrawal of stimulus measures to make investors nervous.”

Japan’s markets were closed for a holiday. Hong Kong’s Hang Seng Index climbed 1.4 percent with only five of its 42 stocks retreating. China’s Shanghai Composite Index added 0.9 percent. Australia’s S&P/ASX 200 Index rose 0.7 percent, with Rio Tinto Group climbing 3.6 percent after metal prices in London advanced. South Korea’s Kospi Index lost 0.1 percent.

U.S., China

Futures on the Standard & Poor’s 500 Index rose 1 percent. The index slipped 0.3 percent on Nov. 20 as earnings at Dell Inc. and D. R. Horton Inc. trailed estimates and concern grew that the European Central Bank will phase out stimulus measures.

ECB President Jean-Claude Trichet said Nov. 20 the central bank will remove liquidity in order to ensure the bank doesn’t fuel inflation.

China Construction Bank gained 4.1 percent to HK$7.40 and was the biggest contributor to the MSCI index’s advance. Industrial & Commercial Bank of China Ltd., the nation’s largest lender, added 3.3 percent to HK$6.97.

China will focus on expanding domestic demand and keep “consistent, stable” macroeconomic policy including fiscal and monetary expansion, the NDRC’s Zhang said at an American Chamber of Commerce event in Beijing on Nov. 20. China should be able to achieve its 8 percent growth target for this year, Zhang said.

Government Spending

The Organization for Economic Cooperation and Development on Nov. 19 raised its forecast for economic growth in China this year to 8.3 percent from 7.7 percent. Growth will accelerate in 2010 to 10.2 percent, the OECD said in a report.

Four trillion yuan ($586 billion) of government spending and $1.3 trillion of new bank lending this year have helped revive growth in China, the world’s third-largest economy.

All 10 industry groups in the MSCI index rose, led by materials stocks. Newcrest Mining climbed 3.2 percent to A$37, Lihir Gold Ltd. added 3.4 percent to A$3.70, and Zijin Mining Group Co., China’s largest gold producer, increased 4.8 percent to HK$8.80 in Hong Kong. The precious metal climbed for a seventh straight session in after-hours trading today to as much as $1,167.80 an ounce.

A measure of six industrial metals traded in London, including aluminum and copper, advanced 0.7 percent on Nov. 20, bringing gains last week to 4.6 percent. BHP Billiton Ltd., the world’s biggest mining company, rose 1.1 percent to A$40.46, and Rio Tinto, the third-biggest, climbed 3.6 percent to A$73.78.

James Hardie Forecast

James Hardie jumped 6.4 percent to A$7.87. The maker of building materials said profit excluding compensation payments to asbestos victims will be closer to the top analyst forecast of $115 million. The lower end of the range was $77 million.

This year’s gain in the MSCI Asia-Pacific Excluding Japan has swelled the price of its stocks to 17.7 times estimated earnings on average, from 8.2 times in October 2008, according to data compiled by Bloomberg. That compares with valuations of 17.3 times for the Standard & Poor’s 500 Index in the U.S. and 15.2 times for the Dow Jones Stoxx 600 Index in Europe.

Among stocks that fell, Hanjin Shipping Co., South Korea’s largest shipping line, dropped 2.9 percent to 18,200 won after the Baltic Dry Index, a measure of shipping rates for commodities, ended a 16-session streak that propelled it 56 percent higher. STX Pan Ocean Co., South Korea’s biggest bulk carrier, slipped 4.2 percent to 11,550 won.

“The global economy, whilst in recovery mode, is still vulnerable,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “Take away the stimulus at the wrong time and it could send it back into a double-dip scenario.”

Sims Metal Management Ltd. fell 4.1 percent to A$21.29 in Sydney after the world’s biggest recycler of scrap metal completed a A$400 million ($369 million) share sale.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.