Asian stock record best week since May
Asian stocks rose this week, giving the MSCI Asia Pacific Index its biggest advance since May, amid renewed confidence the global economy is recovering.
CapitaLand Ltd., Singapore’s biggest developer, climbed 10 percent as Singapore upgraded its economic growth forecasts. Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, jumped 15 percent in Sydney as commodity prices climbed. Bank of Communications Co. gained 8.3 percent in Hong Kong as economist Nouriel Roubini said the worst of the financial crisis is over.
“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.”
The MSCI Asia Pacific Index added 2.7 percent to 103.38 this week. The gauge has rallied 47 percent from a five-year low on March 9 amid optimism stimulus policies around the world will revive the global economy. The MSCI World Index gained 6.7 percent this week, the most since March.
Hong Kong’s Hang Seng Index climbed 6.2 percent, while Japan’s Nikkei 225 Stock Average rose 1.2 percent. Indonesia’s Jakarta Composite Index fell 0.6 percent yesterday, paring its weekly gain to 2.1 percent, after bomb blasts killed at least eight people in the city.
The MSCI Asia Pacific Index has risen this week as government reports showed economic growth accelerated in China and U.S. manufacturing improved. Intel Corp. forecast sales that beat analyst estimates, while International Business Machines Corp. raised its profit forecast.
“Sentiment has been gaining momentum following positive economic and earnings news,” said Michiya Tomita, who helps manage $61 billion at Mitsubishi UFJ Asset Management Co. in Hong Kong. “Most of the good news has been priced in. Investors will be looking for more catalysts in the next few weeks as companies report earnings.”
Stocks on the MSCI Asia Pacific Index are trading at an average 43 times reported earnings, up from the 15 times shares were trading at during the market’s trough in March. Companies on the S&P 500 are currently at 14 times profit.
In Singapore, the Straits Times Index advanced 5.3 percent this week, after the trade ministry said the city’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 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.
CapitaLand surged 10 percent to S$3.73. City Developments Ltd., Singapore’s second-largest property company, jumped 14 percent to S$9.38. City Developments has started selling an 85- unit development, the Business Times reported yesterday.
“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.”
Energy shares, material producers and finance companies were the best performing of the MSCI Asia Pacific Index’s 10 industry groups this week on speculation economic growth will boost commodity prices, real-estate demand and bank lending.
Alumina jumped 15 percent to A$1.52, while Fortescue Metals Group Ltd., Australia’s third-largest iron ore exporter, climbed 15 percent to A$3.92. BHP Billiton Ltd., the world’s largest mining company and Australia’s largest oil producer, added 7.8 percent to A$35.20.
A gauge of six metals in London rose 9.1 percent, the best week since Feb. 6. Oil futures in New York added 6.1 percent, the biggest weekly advance since May 29.
Among finance companies, Bank of Communications, part owned by HSBC Holdings Plc, rose 8.3 percent to HK$8.83 in Hong Kong. HSBC, Europe’s largest lender, climbed 9.2 percent to HK$68.30.
Sumitomo Realty & Development Co., Japan’s No. 3 developer, rose 5.2 percent to 1,646 yen. Takashi Hashimoto, a Barclays Capital analyst in Tokyo, assigned an “overweight” recommendation to the company in new coverage.
“The freefall of the economy has stopped,” New York University’s Roubini, who predicted the financial crisis, said on July 16. “There is light at the end of the tunnel. And the light at the end of the tunnel for once is not the one of an incoming train.” Roubini reiterated his view that the contraction would last 24 months.