Asian stocks rise on China growth

Asian stocks advanced, lifting the MSCI Asia Pacific Index to a two-week high, as faster economic growth in China and an improvement in U.S. manufacturing gauges fueled optimism the global economy is recovering.

Jiangxi Copper Co., China’s largest producer of the metal, surged 4 percent in Shanghai as commodity prices gained. Rio Tinto Ltd., the world’s No. 3 mining company, added 4.6 percent after Bank of America’s Merrill Lynch & Co. unit raised earnings estimates. Nissan Motor Co., which gets 34 percent of its revenue in North America, jumped 3.7 percent. Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, gained 2.8 percent.

The MSCI Asia Pacific Index advanced 0.8 percent to 102.40 as of 3:55 p.m. in Tokyo, taking a three-day gain to 4.4 percent. The gauge, which is set to close at its highest level since July 3, has rallied 45 percent from a five-year low on March 9 amid optimism stimulus policies around the world will revive the global economy.

“This upward trend will continue for some time, as economic indicators have confirmed the economy is recovering,” said Harvey Chang, a SinoPac Securities Investment Trust Co. fund manager who helps oversee about $1.5 billion. “There’s plenty of money in the market.”

Japan’s Nikkei 225 Stock Average added 0.8 percent, while Hong Kong’s Hang Seng Index gained 1.3 percent. China’s Shanghai Composite Index rose 0.5 percent after the country’s statistics bureau said the economy grew 7.9 percent in the second quarter after a 6.1 percent gain in the previous three months.

Sinotruk, Canon

Sinotruk (Hong Kong) Ltd., China’s biggest heavy-truck maker, jumped 15 percent after agreeing to sell a stake to Germany’s MAN SE. Canon Inc., the world’s largest camera maker, added 1.7 percent in Tokyo after the Nikkei newspaper reported earnings will rise. China Shipping Development Ltd., a unit of the country’s second-biggest sea-cargo group, rose 4.4 percent in Hong Kong after cargo rates rose for a second day.

Futures on Standard & Poor’s 500 Index lost 0.5 percent as lender CIT Group Inc. said it probably won’t receive a federal bailout. The S&P 500 climbed 3 percent in New York yesterday after Federal Reserve figures showed industrial production shrank 0.4 percent last month, the least in eight months. The New York Fed’s Empire Index rose to minus 0.6 this month, the highest level since April 2008.

Optimism an expansion of manufacturing will boost demand for materials lifted prices for copper and oil yesterday. Copper futures leapt 4.1 percent in New York, the most since June 9. Crude oil jumped 3.4 percent, the steepest climb since June 23.

Commodity Stocks

Jiangxi Copper rose 4 percent to 37.35 yuan. BHP Billiton Ltd., the world’s biggest mining company, gained 1.8 percent to A$34.91. Mitsubishi Corp., which gets almost half of its sales from commodities, climbed 4.6 percent to 1,695 yen in Tokyo.

Rio Tinto jumped 4.6 percent to A$52.40. Merrill Lynch & Co. boosted its 2010 earnings for the company by 20 percent. Goldman Sachs Group Inc. said Rio Tinto may get an earnings boost from rising demand for iron ore.

Nissan gained 3.7 percent to 555 yen on speculation demand in the U.S. will pick up. Honda Motor Co., which makes 45 percent of its revenue in North America, advanced 1 percent to 2,470 yen. Komatsu, which gets 25 percent of its sales from the Americas, jumped 2.8 percent to 1,419 yen.

The MSCI Asia Pacific index is heading for its first weekly gain in three amid signs Asian economies are rebounding. Stocks on the gauge are valued at an average 43 times reported earnings, up from the 15 times stocks were trading at during the market’s trough in March. Companies on the S&P 500 are currently at 14.8 times profit.

Economic Recovery?

Singapore on July 14 forecast a narrower contraction in its gross domestic product this year. New home sales in the city- state jumped 9.1 percent last month, government data released yesterday showed. Australian business sentiment turned positive in June for the first time since December 2007, a National Australia Bank Ltd. index released on July 14 showed.

“A rebound in the economy won’t be very fast but we don’t have to be too pessimistic in that the situation is getting better,” said Mitsushige Akino, who oversees the equivalent of $522 million at Ichiyoshi Investment Management Co. “I’m expecting relatively good earnings reports from companies because they have finished clearing inventories.”

China-related stocks gained as the country’s second-quarter economic growth rate beat economist estimates. A 4 trillion yuan ($585 billion) stimulus package and the scrapping of lending restrictions for banks helped trigger the revival in the world’s third-largest economy.

Shenhua Energy Co., the nation’s biggest coal producer, rose 0.9 percent to HK$27.15. China Resources Enterprise Ltd., the retailer whose venture with SABMiller Plc makes China’s best-selling beer, added 2.2 percent to HK$18.08.

Second-Largest Market

Sinotruk soared 15 percent to HK$8.65. MAN, Europe’s third- biggest truckmaker, will pay 560 million euros ($788 million) for a 25 percent stake in Sinotruk, the companies said late yesterday.

China has now overtaken Japan as the world’s second-largest stock market by value for the first time in 18 months. The Shanghai Composite has gained 76 percent this year compared with a 5.5 percent advance in the Nikkei 225.

Canon added 1.7 percent to 3,080 yen. The company will likely report about 30 billion yen ($319 million) in operating profit for the three months to June, a 50 percent increase from the previous quarter, the Nikkei newspaper reported today. Demand for cameras grew, while that for office equipment remained weak, the newspaper said.

Makoto Sugimoto, a Canon spokesman, said the company wasn’t the source of the Nikkei report.

Baltic Dry Index

Shipping stocks gained after cargo rates rose. The Baltic Dry Index, which measures the cost of shipping commodities, climbed 7.3 percent in London yesterday, taking gains in the past two days to 12 percent.

China Shipping Development rose 4.4 percent to HK$10.56. STX Pan Ocean Ltd., South Korea’s biggest bulk carrier, gained 2.7 percent to 11,250 won in Seoul. Mitsui O.S.K. Lines Ltd., the world’s largest operator of iron-ore vessels, added 1.9 percent to 585 yen in Tokyo.

Source: Bloomberg

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