Asian stocks rose for a 10th day, driving the MSCI Asia Pacific Index to its longest winning streak since 2004, on confidence a rebound in regional economies will boost earnings.
Nomura Holdings Inc., Japan’s largest brokerage, rose 3.3 percent after the Nikkei newspaper said the company may post its first quarterly profit since 2007. China Mobile Ltd., the world’s No. 1 provider of mobile-phone services by subscribers, climbed 4 percent in Hong Kong on speculation it will sell shares on the mainland. Lotte Shopping Co., South Korea’s No. 1 department store operator, jumped 5.6 percent after the nation’s consumer confidence rose to a seven-year high.
“Earnings have come in ahead of expectations and the economic data is quite reasonable,” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “It’s given people encouragement that we’re moving into a recovery phase.”
The MSCI Asia Pacific Index climbed 1.3 percent to 109.44 as of 1:45 p.m. in Tokyo. An acceleration in China’s economic growth and better-than-expected U.S. earnings have helped drive a 12 percent climb in the past 10 days. That’s the longest winning streak since January 2004.
Japan’s Nikkei 225 Stock Average advanced 1.6 percent, led by Hitachi Ltd., after the Nikkei said the company will take over five listed affiliates. Sichuan Expressway Co. jumped 174 percent in its first day of trading in Shanghai. Rio Tinto Group, the world’s third-largest mining company, climbed 3.8 percent in Sydney as nickel and aluminum prices rose.
Futures on the Standard & Poor’s 500 Index rose 0.3 percent today. The gauge added 0.3 percent on July 24 after Federal Reserve Chairman Ben S. Bernanke said the central bank is “winding down” emergency measures aimed at curbing the financial crisis. Analysts are raising U.S. earnings estimates for the first time since credit markets froze two years ago, data compiled by Bloomberg show.
Stocks on the MSCI Asia Pacific Index are valued at an average 24.5 times estimated net income, the most expensive level since March 31. The gauge has climbed 55 percent from a more than five-year low on March 9 on speculation stimulus policies worldwide will revive the global economy.
U.S. companies including Intel Corp. and Apple Inc. this month reported better-then-expected results. Government figures due July 31 may show that the contraction in the U.S. economy narrowed to a 1.5 percent pace in the second quarter, following a 5.5 percent drop in the first three months of 2009, economists surveyed by Bloomberg News predicted.
“We seem to be witnessing a natural recovery, regardless of the stimulus that’s been put in,” said Paradice’s Riordan. “I suspect the recovery will continue.”
Brokerage, Bank Earnings
Japan’s three largest brokerages, Nomura, Daiwa Securities Group Inc. and Nikko Cordial Corp., which is being acquired by Sumitomo Mitsui Financial Group Inc., likely swung to profit last quarter on rising mutual fund sales and underwriting fees, the Nikkei said yesterday. Nomura jumped 3.3 percent to 821 yen. Daiwa rose 3.9 percent to 556 yen.
The nation’s top three banks also likely became profitable last quarter with a combined net income of as much as 200 billion yen ($2.1 billion), the Mainichi newspaper reported on July 25. Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui each rose at least 2 percent.
China Mobile advanced 4 percent to HK$80.20. Cnooc Ltd., the nation’s biggest offshore oil producer, gained 0.8 percent to HK$10.54. The companies will be among the first Hong Kong- listed Chinese companies to sell A-shares on the mainland market, Apple Daily reported today, without citing anyone.
Initial Public Offerings
The Shanghai Composite Index has surged 87 percent this year. Sichuan Expressway, a toll-road operator, jumped 174 percent to 9.89 yuan today from its offer price in Shanghai’s first initial public offering since regulators lifted a nine- month moratorium on IPOs in June.
“There is still a lot of hot money that’s coming to the market to chase hot stocks,” said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co. in Beijing. “Still, with lots of IPOs coming to the market, the negative impact of absorbing liquidity will gradually emerge.”
Lotte Shopping surged 5.6 percent to 302,000 won. The company said near the end of market trading on July 24 second- quarter earnings rose 19 percent on rising profit margins. Shinsegae Co., which runs South Korea’s biggest discount-store chain, added 2.8 percent to 549,000 won.
An index of consumer sentiment in South Korea rose to 109 from 106 in June, the Bank of Korea said in Seoul today. That’s the highest level since the third quarter of 2002, when the bank published its confidence survey on a quarterly basis. A score of more than 100 indicates optimists outnumber pessimists.
Hitachi rallied 4.4 percent to 307 yen after the Nikkei said the electronics giant will spend 300 billion yen to make five listed affiliates into wholly owned subsidiaries.
Hitachi Maxell Ltd., Hitachi Plant Technologies Ltd., Hitachi Information Systems Ltd., Hitachi Software Engineering Co. and Hitachi Systems & Services Ltd., were all untraded with the shares bid higher by as much as 18 percent.
Assuming the Nikkei report on Hitachi is true, “overseas investors will likely see the plan as a chance to make Hitachi’s operations more efficient,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo.
Rio Tinto jumped 3.8 percent to A$59.75. Fortescue Metals Group Ltd., Australia’s third-largest iron-ore producer, gained 3.9 percent to A$4.50. Aluminum Corp. of China, the Asian nation’s No. 1 producer, rose 3.2 percent to HK$9.10.
A gauge of six metals in London climbed for a 10th day on July 24 to a level not seen since Oct. 9. Crude oil rose 1.3 percent to $68.05 a barrel in New York the same day, the highest settlement since July 1. Oil dipped 0.4 percent today.
Cash prices for iron ore delivered to China rose last week, according to Metal Bulletin. That placed spot ore 25 percent above the agreed benchmark contract price, according to analysts at Macquarie Group Ltd.