BLBG: Asian Stocks Advance on U.S. Service Report, Commodity Prices
Oct. 6 (Bloomberg) -- Asian stocks rose for the first time in four days, led by companies reliant on overseas sales, after U.S. service industries returned to growth following 11 months of contraction and commodity prices gained.
Nissan Motor Co., which got 34 percent of sales from North America last year, gained 4.1 percent in Tokyo. Mazda Motor Corp., Japan’s No. 4 carmaker, rose 5.4 percent after narrowing a loss forecast. Jiangxi Copper Co., China’s largest producer of the metal, climbed 2.9 percent in Hong Kong. Alibaba.com Ltd., operator of China’s biggest trading Web site, climbed 4.4 percent after Deutsche Bank AG upgraded the stock.
The MSCI Asia Pacific Index added 1 percent to 114.89 as of 1:42 p.m. in Tokyo, following a three-day, 3.6 percent drop. The gauge has rallied 61 percent from a five-year low on March 9 amid better-than-estimated economic data and earnings reports. Shares on the gauge trade at an average 22 times estimated profit, more than the MSCI World Index’s 17 times.
“Asian markets are at higher valuations than most other markets, but the expectation is that you’ll get a lot more growth,” said Philip Schwartz, who manages $1.2 billion as head of international investing at ING Investment Management in New York. “Unless the numbers are really disappointing, I don’t think there’s a lot of risk to the markets.”
Hong Kong’s Hang Seng Index rose 0.7 percent while Singapore’s Straits Times Index climbed 1.3 percent. Taiwan’s Taiex Index increased 1.7 percent.
Rate Increase
Australia’s S&P/ASX 200 Index advanced 0.4 percent. The gauge pared earlier gains after the nation’s central bank unexpectedly raised its benchmark interest rate from a 49-year low by a quarter percentage point amid signs the economy is strengthening. Only one of 20 economists surveyed by Bloomberg News forecast today’s decision. The rest predicted no change.
CapitaLand Ltd., Southeast Asia’s biggest developer, gained 2.7 percent in Singapore after announcing plans to list a retail subsidiary. Nitto Denko Corp. jumped 5.7 percent in Tokyo after the Nikkei newspaper reported the chemical product maker’s operating profit may beat forecasts. DeNA Co., the operator of auction and shopping Web sites, surged 12 percent on plans to form an alliance with a U.S. iPhone application developer.
Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 1.5 percent in New York yesterday, breaking a four-day losing streak. The Institute for Supply Management said its index of non-manufacturing businesses climbed to 50.9 in September, exceeding the dividing line between expansion and contraction for the first time in a year.
Share Sale
Nissan, Japan’s No. 3 automaker, rose 4.1 percent to 615 yen in Tokyo. James Hardie Industries NV, the biggest seller of home siding in the U.S., advanced 2.9 percent to A$7.42 in Sydney. Li & Fung Ltd., a Hong Kong trading company that sells goods to Wal-Mart Stores Inc. and Target Corp., climbed 3.5 percent to HK$29.40.
Mazda jumped 5.4 percent to 195 yen. The company narrowed its full-year loss forecast by 48 percent, citing increasing sales and cost cuts. Separately, Mazda said it will sell as many as 363 million new shares and 96.8 million existing shares it held to raise 96 billion yen ($1.1 billion).
Jiangxi Copper climbed 2.9 percent to HK$17.48 after a gauge of six metals in London added 0.2 percent, ending two days of declines. Crude oil rose 0.7 percent to $70.41 a barrel in New York yesterday.
BHP Billiton Ltd. the world’s biggest mining company and Australia’s largest oil producer, rose 0.7 percent to A$36.58. Rio Tinto Ltd., the world’s No. 3 mining company, added 1.5 percent to A$57.69.
Rising Valuations
The MSCI Asia Pacific Index fell 2.8 percent last week, the most since the period ended Aug. 21, on concern its seven- month rally had outpaced the prospects for a revival in the global economy. The average price of companies in the gauge climbed to 1.6 times book value on Sept. 17, up from 1 at the March low. The measure now trades at 1.5 times book.
Nobel Prize-winning economist Joseph Stiglitz said recent stock market gains indicate investors have been “irrationally exuberant” about a recovery as rising job losses in the U.S. inhibit consumers’ ability to pay off debts. Reports in the past two weeks showed U.S. manufacturing, orders for durable goods and new home sales missed economist estimates.
Yesterday’s “U.S. service report is one of the few bright spots we’ve come across recently, but that report alone isn’t enough to reassure investors,” said Hiroshi Morikawa, a senior strategist in Tokyo at MU Investments Co., which manages the equivalent of $14 billion. “The economic outlook is getting hazier. Investors are starting to wonder when the recovery will lose its momentum.”
Slow Recovery
Federal Reserve Bank of Dallas President Richard Fisher said in a televised interview yesterday with PBS’ Nightly Business Report that the U.S. is likely to undergo “a very slow process” of recovery.
Alibaba.com Ltd., operator of China’s biggest trading Web site, climbed 4.4 percent to HK$18.66. Deutsche Bank AG lifted its rating on the stock to “buy” from “hold,” saying the company will benefit from better export outlook, according to a research report released today.
CapitaLand gained 2.7 percent to S$3.77 in Singapore. OCBC Investment Research raised the stock to “buy” from “hold” after CapitaLand said it plans to list CapitaMalls Asia Ltd., which will own and manage malls in China, Malaysia, Japan, India and Singapore.
Nitto Denko jumped 5.7 percent to 2,680 yen. The company’s operating profit may amount to about 40 billion yen ($448 million) for the year ending March 31, higher than its 23 billion yen forecast, the Nikkei said today.
Nitto Denko said it’s not the source of the report and that it plans to revise its annual earnings outlook on Oct. 30.
DeNA surged 12 percent to 257,000 yen. The company said it plans to buy 20 percent of California-based Aurora Feint, aiming to start providing services to iPhone game developers in the global markets. KBC Securities analyst Hiroshi Kamide raised his rating on the company to “hold” from “sell.”
To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
