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Asian Stocks Rise for Fourth Week in Longest Winning Streak Since March
Asian stocks rose for the fourth consecutive week, their longest winning streak in four months, as company earnings reports boosted confidence in the strength of the global economy.
Canon Inc., the world’s largest camera maker, jumped 9.3 percent this week in Tokyo after reporting profit that beat analyst estimates. Sony Corp., the maker of Bravia televisions, gained 7.6 percent in Tokyo after raising its annual forecasts. HSBC Holdings Plc, Europe’s largest bank, climbed 3.7 percent in Hong Kong after most European banks passed stress tests. Sanyo Electric Co. soared 21 percent after getting a takeover bid.
The MSCI Asia Pacific Index rose 1.4 percent this week to 119.11 and climbed 5.6 percent this month, its first monthly increase since April and the biggest gain since March. The index has slumped about 8 percent from its high this year on April 15 on concern China’s measures to limit property-price inflation and Europe’s government-debt would stall global growth.
“People are buying on optimism the global economy is on an uptrend after seeing those positive earnings reports,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion.
Japan’s Nikkei 225 Stock Average gained 1.1 percent this week, even as industrial production unexpectedly dropped and unemployment climbed. Hong Kong’s Hang Seng Index rose 1 percent. China’s Shanghai Composite Index advanced 2.6 percent after the central bank said it will keep a “moderately loose” monetary policy.
Canon, Sony Earnings
Canon jumped 9.3 percent to 3,765 yen this week in Tokyo after saying first-quarter net income more than quadrupled to 67.6 billion yen ($779 million), beating analysts’ estimates, as the economic recovery boosted demand for single-lens reflex cameras and laser printers.
Sony increased 7.6 percent to 2,705 yen, the highest close since June 4. The world’s No. 3 television maker raised its full-year earnings forecasts after posting an unexpected profit last quarter.
Singapore Airlines Ltd., the world’s second-biggest carrier by market value, climbed 5.7 percent this week in Singapore after posting better-than-estimated first-quarter profit and saying a recovery in demand will continue.
This week was the peak for April-June earnings reports in the Asia-Pacific region, with more than one-fourth of the 985 companies in the MSCI Asia Pacific Index releasing results, according to data compiled by Bloomberg. More than half the companies that announced results have exceeded analysts’ estimates, Bloomberg data show.
Cheapest Since 2008
Speculation economic growth may falter dragged down the MSCI Asia Pacific Index by as much as 9.6 percent this year, and the average price of stocks in the gauge dropped this month to the lowest level since December 2008. The index’s companies trade at about 14 times estimated profit.
Baoshan Steel & Steel Co., the listed unit of China’s second-biggest steelmaker, advanced 4.1 percent to 6.55 yuan in Shanghai this week after the nation’s statistics bureau said on July 28 profits of Chinese industrial companies in 24 regions jumped 72 percent to 1.61 trillion yuan ($237.5 billion) in the first half of 2010 from a year earlier.
“A double-dip for China’s economy seems unlikely,” said Zhang Ling, a fund manager at Shanghai River Fund Management Co. “The rebound will carry on for a while as stocks are cheap and earnings of some companies have beaten expectations.”
Banks, Sanyo Gain
Banks rose this week after the results of financial tests by European regulators showed 92 percent of lenders passed. They got a further boost after the Basel Committee on Banking Supervision, which represents central banks and regulators in 27 nations and sets capital standards for banks worldwide, on July 26 proposed softer capital and liquidity rules.
HSBC advanced 3.7 percent to HK$79.75 in Hong Kong and London-based Standard Chartered Plc climbed 5 percent to HK$226.20. Westpac Banking Corp. increased 5.5 percent to A$23.99 in Sydney. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, gained 5.4 percent to 429 yen.
“The stress test results weren’t the disaster that some thought it would be,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “As time goes on, the likelihood of a double dip recession seems to be diminishing, but economic growth is going to be tempered.”
Sanyo Electric, Japan’s third-biggest maker of solar panels, soared 21 percent to 136 yen, and Panasonic Electric Works Co. jumped 21 percent to 1,099 yen. Panasonic Corp., the world’s largest maker of rechargeable batteries, offered to buy out both companies for 818.4 billion yen.
To contact the reporters for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net.
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