Asian stocks advanced, driving the regional benchmark index to its highest level since last month’s earthquake, on speculation damage was limited from yesterday’s 7.1 magnitude aftershock in Japan and that engineering companies may benefit from efforts to rebuild the country.
Hyundai Heavy Industries Co., the South Korean shipbuilder that also supplies industrial machinery and construction equipment, climbed 3.6 percent in Seoul. Toyota Motor Corp., the world’s largest carmaker, gained 1.4 percent in Tokyo after saying it will resume output at its factories in Japan on April 18 after halting production following the March 11 earthquake. Cnooc Ltd. (883), China’s biggest offshore oil explorer, increased 1.5 percent in Hong Kong as oil topped $110 a barrel.
The MSCI Asia Pacific Index climbed 0.9 percent to 136.51 as of 4:49 p.m. in Tokyo, heading for its highest close since March 9. The gauge is headed for a 0.9 percent advance this week, its third consecutive weekly gain. Almost two stocks rose for each that fell in the index.
“Investors are looking at a scenario that there will be reconstruction opportunities in Japan, but I think the issues will be more far-reaching,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management, which oversees about $72 billion. “Aside from the risk of nuclear fallout from Japan, we are still faced with a much higher inflationary situation because of higher demand for fuel and food.”
The Asia-Pacific benchmark gauge has risen for three weeks as Japanese companies resumed production after last month’s quake and Chinese firms posted profits that beat analyst estimates.
‘Wasn’t as Bad’
Japan’s Nikkei 225 Stock Average climbed 1.9 percent, erasing losses of as much as 0.6 percent earlier. South Korea’s Kospi Index increased 0.3 percent. Hong Kong’s Hang Seng Index rose 0.6 percent. China’s Shanghai Composite Index and Australia’s S&P/ASX 200 Index both increased 0.7 percent.
“The market initially expected the effects of the aftershock last night to be like the huge earthquake last month, but as the day went on they slowly realized it wasn’t as bad,” said Yuuki Sakurai, president at Fukoku Capital Management Inc., which manages the equivalent of $8.6 billion in Tokyo. “Considering the strength of the magnitude, the damage wasn’t that much, which is being seen as positive.”
The Nikkei 225 (NKY) on March 14 and March 15 posted its biggest two-day plunge since the 1987 stock-market crash after the quake and tsunami on March 11 left more than 27,000 people dead or missing and caused radiation leaks at Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear power plant. Through yesterday, the benchmark gauge has fallen 8.1 percent since March 10.
Yesterday’s 7.1-magnitude earthquake, which struck minutes before midnight, spared the Fukushima plant, although workers struggling to cool radioactive fuel were evacuated, Tokyo Electric said. No additional damage was observed at the plant afterward, the utility and Japan’s Nuclear and Industrial Safety Agency said in statements. The aftershock was the strongest since March 11.
A gauge of industrial engineering companies posted the biggest advance among the 10 industry groups in the MSCI Asia Pacific Index, all of which gained. Tokyo Electric surged 24 percent to 420 yen, paring its plunge since the earthquake to 80 percent.
Hyundai Heavy increased 3.6 percent to 547,000 won in Seoul. Samsung Engineering Co., the builder of petrochemical plants and industrial facilities, climbed 4.5 percent to 231,000 won. Japan Steel Works Ltd., a supplier of machinery used in oil refineries and petrochemical plants jumped 9.5 percent to 646 yen in Japan.
Toyota rose 1.4 percent to 3,340 yen. Toyota will reopen production at 50 percent of full operating capacity and continue manufacturing through April 27, said Paul Nolasco, a spokesman for the Toyota City, Japan-based carmaker. The company hasn’t decided on a production plan after Japan’s Golden Week holidays in early May, he said.
Futures on the Standard & Poor’s 500 Index gained 0.4 percent today. The gauge lost 0.2 percent in New York yesterday and the Dow Jones Industrial Average retreated from an almost three-year high as a dispute over the federal budget threatened to shut down the American government.
Fast Retailing Co., the operator of the Uniqlo casual- clothing chain, advanced 7.3 percent to 11,940 yen. The retailer raised its full-year net income forecast by 18 percent to 60 billion yen ($703 million) on overseas growth and lower costs. Also, the company said it will form a venture with Mitsubishi Corp. to operate Uniqlo clothing stores in Thailand.
Energy producers gained as oil headed for a third week of gains in New York after climbing above $110 a barrel as a fire burned at Libya’s Sarir field, heightening concern that spreading conflict in North Africa and the Middle East will disrupt supplies. Crude for May delivery rose as much as 1.1 percent to $111.48 a barrel in electronic trading on the New York Mercantile Exchange, and was at $111.39 at 3:45 p.m. Tokyo time.
Cnooc climbed 1.5 percent to HK$21 in Hong Kong. Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, increased 0.7 percent to A$47.26. Rival Santos Ltd. gained 0.6 percent to A$16.28.
SGX Bid Rejected
SK Holdings Co., the parent of oil refiner SK Innovation Co., surged 12 percent to 178,000 won. Samsung Securities Co. raised its share-price forecast by 23 percent to 273,000 won, saying the stock is “excessively” undervalued.
Singapore Exchange Ltd., operator of the city’s securities exchange, gained 2.6 percent to S$8.36 after Australian Treasurer Wayne Swan said the government rejected Singapore Exchange’s bid for bourse operator ASX Ltd. Both bourses terminated their merger agreement.
“The prevailing market price has been factoring in a potentially overpriced deal,” Simon Ng, a Hong Kong-based analyst at UOB-Kay Hian Holdings Ltd., wrote in a note to clients. “With the deal being called off for good, the stock price is on track to an easier way up.” Singapore Exchange offered to buy ASX on Oct. 25 in a cash and share deal then valued at A$8.4 billion ($8.8 billion), a 42 percent premium to ASX’s share price.
The MSCI Asia Pacific Index lost 1.7 percent this year through yesterday, compared with gains of 6 percent by the S&P 500 and 1.8 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.2 times estimated earnings on average, compared with 13.7 times for the S&P 500 and 11.3 times for the Stoxx 600.
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