Asian stocks rise on growth optimism
Asian stocks rose, giving the MSCI Asia Pacific Index its biggest gain in a month, as Singapore upgraded its forecast for economic growth and fund manager Barton Biggs said some Asian markets are “still attractive.”
DBS Group Holdings Ltd., Southeast Asia’s biggest bank, gained 2.1 percent in Singapore. Posco, South Korea’s largest steelmaker, climbed 3.5 percent in Seoul after saying 2009 output may be 6.4 percent higher than forecast. Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, surged 7.1 percent after the Nikkei English News said the company likely posted an operating profit in the April-June quarter.
The MSCI Asia Pacific Index rose 2 percent to 100.05 as of 2:24 p.m. in Tokyo after closing yesterday at its lowest level since May 18. The index today climbed the most since June 10 and has risen 42 percent from a five-year low on March 9 on optimism government stimulus policies will revive the global economy.
“The recovery is gaining traction,” said Nader Naeimi, a strategist at AMP Capital Investors in Sydney, which manages about $95 billion. “Even if we don’t see spectacular growth, a stabilization should be enough to support a market rally.”
Japan’s Nikkei 225 Stock Average rose 2.2 percent, with NEC Electronics Corp. surging 10 percent after the Nikkei said the company will boost production. South Korea’s Kospi Index added 1.2 percent, led by KB Financial Group Inc. after JPMorgan Chase & Co. lifted its recommendations on the country’s lenders.
Coal Shipments
Singapore’s Straits Times Index gained 1.7 percent. The S&P/ASX 200 Index in Australia climbed 3 percent, led by mining company BHP Billiton, which jumped 4.3 percent as coal shipments from the country’s Newcastle port climbed.
Futures on the Standard & Poor’s 500 Index added 0.2 percent. The gauge rallied 2.5 percent yesterday, led by finance shares after analyst Meredith Whitney said U.S. bank stocks will likely rise 15 percent. She recommended investors buy Goldman Sachs Group Inc.
In Singapore, DBS gained 2.1 percent to S$11.66. CapitaLand Ltd., the city’s biggest developer, rose 2.7 percent to S$3.40.
Singapore’s gross domestic product will shrink between 4 percent and 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent, the trade ministry said today. The economy grew an annualized 20.4 percent last quarter from the previous three months, after declining a revised 12.7 percent between January and March, it said.
“Early signs of a global recovery have now emerged,” Alan Bollard, governor of the New Zealand central bank said today. Australian business sentiment turned positive in June for the first time since December 2007, a National Australia Bank Ltd. index released today showed.
Rising Valuations
Raw material producers accounted for 15 percent of the MSCI Asia Pacific Index’s advance today. Posco climbed 3.5 percent to 445,000 won. The company announced its new production target after the market closed yesterday as it reported second-quarter profit that beat analyst estimates.
Komatsu rose 7.1 percent to 1,387 yen. The company will likely report about 5 billion yen ($54 million) in operating profit for the three months to June, recovering from a loss in the previous quarter, the Nikkei newspaper reported. Demand in emerging markets, including China, and cost cuts contributed to earnings, the newspaper said.
“Stimulus measures will soon start to take effect in emerging countries such as China and India, and people are snapping up companies that will benefit from their revival,” said Yoshihiro Ito, senior strategist at Okasan Asset Management Co., which oversees about $7.7 billion.
World’s Best Investments
Chinese stocks are among the world’s best investments because the nation’s economic growth is poised to exceed forecasts, according to Barton Biggs, who runs New York-based hedge fund Traxis Partners LP. The Shanghai Composite Index added 1.8 percent today.
“The emerging markets, particularly Asia, are the growth area of the world and they’re emerging from the financial crisis faster than any other part of the world,” Biggs said in an interview with Bloomberg Television.
NEC Electronics, Japan’s fourth-largest chipmaker, surged 10 percent to 816 yen after the Nikkei reported the company will bolster use of its plant in Kumamoto prefecture, southwestern Japan, to about 70 percent.
KB Financial, owner of South Korea’s largest bank, advanced 4 percent to 46,450 won after JPMorgan upgraded the country’s lenders on expectations earnings will recover and credit costs will shrink.
Temporary Gains?
KB, Shinhan Financial Group Co., Daegu Bank, Busan Bank and Samsung Card Co. were raised to “overweight” from “neutral” Shinhan Financial, owner of South Korea’s second-biggest bank, added 4.3 percent to 34,300 won.
“Today’s gains might still be a bit short-lived,” said Steven Leung, a Hong Kong-based director of institutional sales at UOB-Kay Hian Ltd. “People have been getting more cautious as valuations aren’t as attractive as a couple of months ago. Most of my institutional clients have a very high level of cash in hand.”
The stock rally since March has lifted the average valuation of companies on the MSCI Asia Pacific Index to 41 times reported profit, more than double the 15 times stocks were trading at during the market’s trough that month.
Melbourne-based BHP jumped 4.3 percent to A$33.59, while Rio Tinto Group added 4 percent to A$48.48. The companies are among those that ship coal through Newcastle, the world’s biggest export harbor for the fuel.
Coal shipments from the port gained 11 percent last week while the number of vessels waiting to load decreased, Newcastle Port Corp. said on its Web site.
Mitsubishi Corp., which operates an alliance with BHP that is the world’s biggest exporter of coking coal, climbed 3.5 percent to 1,617 yen in Tokyo.
Source: Bloomberg