Asia Stocks Rise to 11-Week High on Earnings Outlook; Yen, Dollar Weaken
Asian Stocks Advance on Earnings Outlook
Tomohiro Ohsumi/Bloomberg
The MSCI Asia Pacific Index rose 0.6 percent to 119.82 as of 9:22 a.m. in Tokyo, with four stocks advancing for each one that declined.
The MSCI Asia Pacific Index rose 0.6 percent to 119.82 as of 9:22 a.m. in Tokyo, with four stocks advancing for each one that declined. Photographer: Tomohiro Ohsumi/Bloomberg
Aug. 2 (Bloomberg) -- Sean Darby, chief Asian equity strategist at Nomura Holdings Inc. in Hong Kong, speaks with Bloomberg's Rishaad Salamat about China's stock market and economy. China’s manufacturing grew at the slowest pace in 17 months in July as the government clamped down on property speculation and investment in energy-intensive and polluting factories. Darby also discusses China's currency policy. (Source: Bloomberg)
July 29 (Bloomberg) -- Michael Kurtz, head of China research at Macquarie Group Ltd., talks with Bloomberg's Haslinda Amin about his investment strategy for China stocks. Kurtz, speaking in Hong Kong, also discusses the outlook for China's economy, central bank monetary policy and real estate market. (Source: Bloomberg)
Asian stocks climbed, driving the MSCI Asia Pacific Index to an 11-week high, as companies increased profit forecasts. The yen and dollar weakened and commodities rose as demand for higher-yielding assets increased.
The MSCI Asia Pacific Index climbed 1.1 percent to 120.40 at 4 p.m. in Tokyo, extending four weeks of gains. The Stoxx Europe 600 increased 0.8 percent. Standard & Poor’s 500 futures gained 0.7 percent. The yen declined to 113.25 per euro from 112.84 in New York last week. The dollar slipped to $1.3074 per euro from $1.3052, after declining to $1.3107 on July 29, the weakest since May. Wheat surged to the highest price since 2008.
Investor confidence increased after companies from Honda Motor Co. to Hyundai Mobis Co. reported higher earnings or forecasts. About 42 percent of the MSCI Asia Pacific Index’s companies that posted profit since July 12 have beaten analyst estimates, data compiled by Bloomberg show. Chinese companies recorded a 50 percent gain in first-half net income, Shanghai Securities News reported today.
“Positive earnings are easing investor concerns about the global economy,” said Naoki Fujiwara, who helps oversee $5.77 billion at Shinkin Asset Management Co. in Tokyo. “While uncertainties linger, investors don’t have to be fearful of current conditions.”
About three stocks advanced for each one that fell in the MSCI Asia Pacific Index, which was headed for its highest close since May 13. Japan’s Nikkei 225 Stock Average gained 0.4 percent, Australia’s S&P/ASX 200 Index rose 1.1 percent and Hong Kong’s Hang Seng Index jumped 1.4 percent.
‘In Good Shape’
Honda advanced 4 percent to 2,818 yen after raising its full-year profit forecast by 34 percent as vehicle demand in the U.S. and Asia increased. Hitachi Ltd. climbed 4.3 percent to 367 yen as the electronics and heavy machinery maker boosted its forecast for first-half profit by 82 percent.
“Earnings are in good shape, and we are seeing upward revisions to forecasts,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo.
Hyundai Mobis, South Korea’s biggest auto-parts maker, jumped 8.6 percent to 222,000 won in Seoul. Second-quarter profit jumped 60 percent after customers Hyundai Motor Co. and Kia Motors Corp. boosted vehicle sales.
Suning Appliance Co., China’s biggest home appliance retailer by market value, jumped 2.5 percent to 12.81 yuan in the southern city of Shenzhen. The company reported a 56 percent climb in first-half profit.
China’s Shanghai Composite Index rose 1.1 percent on the prospect the government will reverse policies aimed at slowing economic growth after the government’s Purchasing Managers’ Index grew at the slowest pace in 17 months.
‘Sigh of Relief’
“The government’s tightening policies have already achieved the desired effect,” said Zhang Kun, a strategist at Guotai Junan Securities Co. in Shanghai. “There won’t be any intensified measures going forward. The market can breathe a sigh of relief.”
South Korea’s Kospi index rose 1.3 percent as a government report showed exports increased for a ninth month in July. The won appreciated 0.9 percent to 1,172.45 per dollar. It earlier reached 1,171.95, the highest level since June 21. Malaysia’s ringgit advanced 0.5 percent to 3.165 per dollar.
The yen and the dollar depreciated against most major currencies as signs the Asian economic recovery is gathering momentum spurred demand for higher-yielding assets. The yen weakened versus all of its 16 major counterparts.
The dollar fell toward its lowest level in almost three months against the euro before a report today that may show U.S. manufacturing expanded at a slower pace in July, giving the Federal Reserve more reason to keep interest rates near zero.
Appetite For Risk
“Growth in Asian economies looks solid,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “This is supportive of equities and risk-taking appetite. The yen and the dollar are likely to be sold.”
Australia’s dollar rose 0.6 percent to 90.94 U.S. cents. Economists in a Bloomberg survey expect reports tomorrow will show the country’s retail sales and building approvals advanced in June.
Copper for three-month delivery on the London Metal Exchange rose for a fourth day, climbing 1.4 percent to $7,395 a metric ton on speculation economic growth will drive demand. Oil futures in New York rose for a third day in after-hours trading, advancing 0.3 percent to $79.18 a barrel.
Wheat Gains
Wheat increased on speculation that a drought in Russia may force the country to curb exports, squeezing global supplies and boosting demand for U.S. shipments.
The September-delivery contract jumped as much as 2.4 percent to $6.775 a bushel on the Chicago Board of Trade, the highest price since Oct. 2, 2008. The best-performing commodity of the past month traded at $6.7725 in Singapore, rising for a fifth straight day.
Treasuries fell as credit-market yields indicated investors are seeking higher yields than those available on government debt. The 10-year yield rose one basis point to 2.919 percent, according to data compiled by Bloomberg.
“The credit market is recovering and it will strengthen through the rest of the year,” said Hiroki Shimazu, an economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “The economic recovery continues. Treasury yields will go up.”
To contact the reporters for this story: Darren Boey in Hong Kong at dboey@bloomberg.net; Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.
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