Asian Stocks Gain for Second Day on Esprit Profit, Cnooc Output

By Jonathan Burgos and Shani Raja

Feb. 3 (Bloomberg) -- Asian stocks rose, giving the MSCI Asia Pacific Index its first back-to-back advance in three weeks, as Esprit Holdings Ltd.’s better-than-estimated profit and Cnooc Ltd.’s output targets boosted earnings prospects in the region.

Esprit, the biggest Hong Kong-listed clothier, gained 7.9 percent. Cnooc, China’s No. 1 offshore oil explorer, jumped 9.4 percent in Hong Kong on plans to increase oil and gas production by as much as 28 percent this year. James Hardie Industries NV, the biggest seller of home siding in the U.S., climbed 3.8 percent in Sydney after U.S. pending home sales rose. Itochu Techno-Solutions Corp., which develops computer systems, surged 6.9 percent after reporting a jump in profits.

“We’re getting more and more confirmation that the cyclical recovery is on track,” said Nader Naeimi, a Sydney- based strategist at AMP Capital Investors, which oversees about $90 billion globally. “The fundamentals continue to be supportive. Still, when the market becomes overbought, it also becomes very vulnerable to a change in sentiment.”

The MSCI Asia Pacific Index gained 1.3 percent to 119.13 as of 6 p.m. in Tokyo, taking its advance in the past two days to 2.5 percent. The measure last rose for two consecutive days on Jan. 14-15. The gauge sank 3 percent last month, the most since February last year, on concern central banks from China to India will tighten monetary policy to curb inflation.

Hong Kong’s Hang Seng Index jumped 2.2 percent. The Shanghai Composite Index gained 2.4 percent as investors speculated losses that had made the gauge the world’s worst performer in 2010 were overdone. Japan’s Nikkei 225 Stock Average rose 0.3 percent. Taiwan’s Taiex Index climbed 1.6 percent and the Kospi Index added 1.2 percent in Seoul.

James Hardie, Boral

Futures on the Standard & Poor’s 500 Index added 0.1 percent. The gauge climbed 1.3 percent in New York yesterday as pending home sales in the U.S. rose 1 percent in December after a 16 percent drop in November, the National Association of Realtors announced in Washington. Compared with a year earlier, pending sales climbed 11 percent.

James Hardie jumped 3.8 percent to A$7.96, while Boral Ltd., a building-materials company that gets 11 percent of its sales in the U.S., advanced 4.5 percent to A$5.60. Both stocks were upgraded to “buy” from “neutral” by UBS AG. Canon Inc., a camera maker that earns 28 percent of its revenue in the Americas, rose 1.4 percent to 3,660 yen.

“The U.S. housing report might help investors have a little more confidence in the economy than before,” said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees about $65 billion. “People had expected difficulties in the recovery of the housing market.”

Esprit, Cnooc

Esprit climbed 7.9 percent to HK$57.90 after the company reported net income of HK$2.7 billion ($348 million) for the six months ended December. The amount beat the HK$2.26 billion mean estimate of analysts surveyed by Bloomberg.

Cnooc gained 9.4 percent to HK$12.32 after saying it plans to produce between 275 million and 290 million barrels of oil equivalent as demand for fuel rises in China. Nine new production areas will come on stream this year off the Chinese coast, the company said.

China Oilfield Services Ltd., a unit of Cnooc’s state- controlled parent, climbed 10 percent to HK$10.86.

Idemitsu Kosan Co. surged 9.9 percent to 6,460 yen as a climb in New York oil futures yesterday increased the profitability of the company’s exploration business in the North Sea. Idemitsu and China Oilfield’s advances were the largest in the MSCI Asia Pacific Index today.

Best Performers

Crude oil futures rose 3.8 percent to $77.23 a barrel in New York yesterday as gains in equities signaled the U.S. economy is rebounding and fuel demand will climb. Gold futures added 1.2 percent. The London Metal Exchange Index of six metals including copper and zinc increased 1 percent.

Advances in commodity prices helped drive gauges of material producers and energy companies on the MSCI Asia Pacific Index up by at least 2.4 percent, the most of 10 industry groups. Optimism the global economic recovery will feed commodities demand has made the two industries the MSCI index’s best performers in the past year.

BHP Billiton Ltd., the world’s largest mining company and Australia’s largest oil producer, increased 2.6 percent to A$41.50, while Rio Tinto Group, the world’s third-largest mining company, added 1.4 percent to A$72.

Technology shares, the MSCI Asia Pacific Index’s second- best performing industry group in the past 12 months, accounted for 15 percent of the gauge’s increase today.

Advanced Semiconductor

Itochu Techno-Solutions surged 6.9 percent to 2,975 yen after the company reported a 63 percent climb in net income for the nine months through December. Advanced Semiconductor Engineering Inc., the world’s largest chip packaging and testing company, jumped 6.9 percent to NT$25.70 in Taipei trading after Citigroup Inc. upgraded the stock to “hold” from “sell.”

The MSCI Asia Pacific Index rallied 34 percent in 2009 as growth in the region helped the world economy emerge from the worst slowdown since World War II. The Standard & Poor’s 500 Index in the U.S. advanced 23 percent last year, while the Dow Jones Stoxx 600 Index climbed 28 percent in Europe.

Companies in MSCI’s Asian index trade at 1.55 times book value on average, compared with 2.2 times for the S&P 500 and 1.7 times for the Stoxx 600.

Investors have wrongly priced in an “orderly” withdrawal of stimulus measures, a rebound in bank lending and coordinated government policy to restore growth, Mohamed A. El-Erian, the chief executive officer of Pacific Investment Management Co. wrote in a Bloomberg News column. That means Wall Street projections for gains in 2010 may prove incorrect and prices will slump, he said.

Nissan, Toyota

Alumina Ltd. rose 1.5 percent to A$1.66 as Citigroup recommended investors buy shares of Alcoa Inc., the largest U.S. aluminum maker. Alumina operates the Alcoa World Alumina & Chemical venture with Alcoa.

“The U.S. housing market is rebounding,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo. “The economy is definitely recovering. Exporters and commodity related shares will be the focus.”

Nissan Motor Co., which derives more than a third of its revenue from North America, gained 1.2 percent to 755 yen after saying vehicle sales in the U.S. rose 16 percent in January.

Toyota Motor Corp., which last month started the recall of more than 4 million vehicles, lost 5.7 percent to 3,400 yen. The company’s U.S. sales fell 16 percent last month to a 10-year low.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.