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Asian stocks rise on earnings speculations

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Asian stocks rose for the seventh day, the longest streak of gains for the MSCI Asia Pacific Index since January, as Shin-Etsu Chemical Co. sought to raise prices and BHP Billiton Ltd. pumped a record amount of crude oil.

Shin-Etsu, the world’s largest maker of silicon wafers, climbed 5.3 percent in Tokyo after saying its unit will start talks with chipmakers to boost prices. BHP, Australia’s biggest oil and gas producer, gained 2 percent after fourth-quarter output reached a record as new fields came on line. China Petroleum & Chemical Corp. rose 8.8 percent in Shanghai after Nomura Holdings Inc. said the company’s first-half net income may more than triple.

“The market is pricing for a recovery,” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “The underlying economy is better than people anticipated.”

The MSCI Asia Pacific Index added 0.5 percent to 107.19 as of 2:19 p.m. in Tokyo, taking its climb in the past seven days to 9.3 percent. The gauge has surged 52 percent from a five-year low on March 9 amid speculation stimulus policies worldwide will boost global economic growth.

Japan’s Nikkei 225 Stock Average advanced 0.8 percent. Nippon Signal Co., which makes traffic signals, jumped 11 percent in Tokyo, while Nexen Tire Corp. climbed 6 percent in Seoul as brokerages set higher target prices for the stocks.

BHP Billiton led the 0.5 percent advance by Australia’s S&P/ASX 200 Index. Gains were limited as lenders fell on plans by National Australia Bank Ltd. to sell shares.

Silicon Wafers

Futures on the U.S. Standard & Poor’s 500 Index fell 0.1 percent. The gauge gained 0.4 percent yesterday as Federal Reserve Chairman Ben S. Bernanke said the country’s economy is showing “tentative signs of stabilization.”

After markets closed, Apple Inc. became the latest U.S. company to report better-than-expected profit. Hon Hai Precision Industry Co., which assembles Apple’s iPhone, gained 2.3 percent to NT$113.5 in Taipei.

Shin-Etsu Chemical climbed 5.3 percent to 4,760 yen, while closest rival Sumco Corp. rose 4.9 percent to 1,583 yen in Tokyo.

Shin-Etsu Chemical said today Shin-Etsu Handotai Co., its wholly owned subsidiary, will start negotiations with chipmakers to raise prices for silicon wafers. The Nikkei newspaper earlier said the company will seek a price increase of as much as 40 percent.

Toshiba Corp., Japan’s biggest chipmaker, jumped 4.2 percent to 375 yen. Apple paid $500 million to Toshiba for flash memory chips, according to the transcript of Apple’s earnings teleconference.

Best Performers

Optimism of a rebound in corporate profits has helped fuel a global stock rally in the past week. The average valuation of companies in the MSCI Asia Pacific Index has risen to 24 times estimated net income, higher than the S&P 500’s 16 times and 14 times for Europe’s Dow Jones Stoxx 600 Index.

The first Quarterly Bloomberg Global Poll of financial investors and analysts showed more than a third of investors see greater opportunity and are taking more risk. Two-thirds of respondents say they are optimistic about India’s prospects, as are 70 percent on China.

India’s finance ministry said on July 2 the nation’s economy may grow by as much as 7.75 percent this year. China said last week its second-quarter gross domestic product expanded 7.9 percent from a year earlier, accelerating from its slowest growth in almost a decade.

Australia’s economy is looking better than the central bank forecast a few months ago, Guy Debelle, an assistant governor at the country’s central bank, said in Melbourne today.

Sinopec, BHP

Materials and energy stocks posted the biggest gains among the MSCI Asia Pacific Index’s 10 industry groups today. The two groups are the gauge’s best performers this year amid speculation an economic rebound will boost commodities demand.

BHP, the world’s biggest mining company, added 2 percent to A$36.92. Fourth-quarter oil production rose 4 percent from a year earlier.

China Petroleum, known as Sinopec, rose 8.8 percent to 13.23 yuan following Nomura’s prediction on earnings. The company, China’s No. 1 refiner, is scheduled to report first- half earnings on August 24.

Nippon Signal surged 11 percent to 903 yen in Tokyo. Nomura rated the stock a new “buy” with a price estimate of 1,000 yen, saying railway upgrade projects overseas will increase demand for the company’s products. Rival Kyosan Electric Manufacturing Co. soared 9.1 percent to 408 yen, while train maker Kinki Sharyo Co. jumped 6.6 percent to 755 yen.

Australian Banks

Nexen climbed 6 percent to 6,500 won after a surge in second-quarter profit prompted Good Morning Shinhan Securities Co. and Korea Investment & Securities Co. to raise their share- price estimates.

Westpac Banking Corp., Australia’s second-biggest bank by market value, fell 2.5 percent to A$19.80. National Australia Bank said it will raise A$2.75 billion ($2.24 billion) from selling equity to help it weather rising bad loans and finance potential acquisitions.

Property developers were the biggest drag on Japan’s Topix Index today on concern the country’s economy won’t stage a quick recovery. NTT Urban Development Corp. slumped 3.4 percent to 89,800 yen. Tokyo Tatemono Co. lost 2.6 percent to 457 yen.

“Real estate is among the industries hardest hit by the recession,” said Kiyoshi Ishigane, a senior strategist at Tokyo-based Mitsubishi UFJ Asset Management Co., which oversees about $52 billion.

Tokyo Tatemono President Makoto Hatanaka said in an interview with the Nikkei published July 20 that Japan’s economy will not have a “V-shaped” recovery and office vacancy rates are likely to continue rising outside of Tokyo.

Source: Bloomberg

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