Asian Stocks Advance for Fifth Day on Fed Stimulus Speculation

Asian stocks rose for a fifth day, paring the regional benchmark index’s biggest monthly retreat in more than a year, on speculation the Federal Reserve may announce measures to shore up the U.S. economy next month.

Honda Motor Co., the Japanese carmaker that gets about 44 percent of sales from North America, gained 1.5 percent in Tokyo. Olam International Ltd. (OLAM), a supplier of agricultural commodities, jumped 11 percent in Singapore after posting higher fourth-quarter profit. Telecom Corp. of New Zealand slumped 3.6 percent in Wellington after releasing details of a demerger and saying its chief executive officer will step down.

The MSCI Asia Pacific Index gained 1.3 percent to 124.90 at 6:21 p.m. in Tokyo, set for its longest streak of daily advances since July 4. The gauge is heading for 8.7 percent decline this month, the most since May 2010, amid concern that global economic growth is slowing as Europe’s sovereign debt crisis spreads and after Standard & Poor’s cut the U.S. credit rating for the first time.

“The market has priced in most of the negative factors, and now it depends on the response from policy makers,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd. “While the market won’t go down easily, to go up it needs a view that appropriate policies will be implemented.”

Australia’s S&P/ASX 200 Index gained 0.6 percent, while South Korea’s Kospi Index increased 2 percent. Hong Kong’s Hang Seng Index advanced 1.6 percent, while China’s Shanghai Composite Index was little changed. Singapore’s Straits Times Index climbed 3.3 percent, the most since July 2009.

U.S. Futures

Japan’s Nikkei 225 Stock Average (NKY) closed 1.30 points, or less than 0.1 percent, higher, having swung between gains and losses at least 10 times, after a report showed Japan’s industrial production rose less than expected in July. Markets in Indonesia, Malaysia and India were shut for holidays.

Futures on the Standard & Poor’s 500 Index (SPX) gained 1 percent today. In New York, the index rose 0.2 percent yesterday after minutes of the Fed meeting this month showed some policy makers favored more aggressive action to stimulate the economy. The Federal Open Market Committee will extend the September 20 policy meeting an extra day to “allow a fuller discussion” of the slowing economy and the central bank’s possible policy response, Chairman Ben S. Bernanke said Aug. 26.

Exporters advanced on speculation shipments to the U.S., the biggest market for Asian products, will rise if the Fed announces new stimulus measures. Honda Motor gained 1.5 percent to 2,474 yen in Tokyo. LG Electronics Inc. (066570), the world’s fourth-largest maker mobile phones by sales, climbed 4.1 percent to 66,600 won in Seoul. Li & Fung Ltd. (494), a supplier of toys and clothes to U.S. retailers including Wal-Mart Stores Inc., increased 3.5 percent to HK$14.04.

‘Downward Pressure’

“There’s still downward pressure on stocks,” said John Woods, Hong Kong-based chief Asian strategist at Citigroup Inc.’s private bank. “I can’t see why there’s going to be a compelling rebound in stock prices until we see clarity on the economic growth outlook.”

The S&P 500 Index fell as much as 1.2 percent before recovering yesterday after the New York-based Conference Board’s index of U.S. consumer confidence slumped to 44.5, the weakest reading since April 2009, from a revised 59.2 reading in July.

Of the 700 companies on the MSCI Asia Pacific Index (MXAP) that posted net income since July 11, 44 percent exceeded estimates, while 35 percent fell short, according to data compiled by Bloomberg.

Olam, one of the world’s top three suppliers of rice, cocoa and coffee, jumped 11 percent to S$2.59 in Singapore after saying fourth-quarter profit climbed 38 percent from a year earlier. Wing Tai Holdings Ltd. (WINGT), a property developer in Singapore, advanced 8.4 percent to S$1.36 after reporting fourth-quarter net income more than doubled.

Telecom New Zealand

Sihuan Pharmaceutical Holdings Group Ltd. (460), a drugmaker in China, surged 14 percent to HK$3.04 in Hong Kong, the most on the MSCI Asia Pacific Index, after posting a 49 percent increase in first-half profit.

Among stocks that dropped, Telecom New Zealand slumped 3.6 to NZ$2.54 after saying the split of its retail and infrastructure businesses will be completed by the end of November. A search for new chief executive officer to replace Paul Reynolds in 2012 has started, the company said.

“There is some concern over the break-up of earnings between the two units,” Guy Hallwright, an analyst at Forsyth Barr in Auckland, said in a telephone interview. stock gained 4.4 percent to 13,400 yen.

Taiheiyo Cement Corp., a supplier of the building material, slumped 15 percent to 135 yen in Tokyo, dropping the most in the Nikkei 225, after announcing a plan to raise as much as 37.5 billion yen ($490 million) by selling shares to the public.

The MSCI Asia Pacific Index declined 10 percent this year through yesterday, compared with a 3.6 percent drop by the S&P 500 and a 16 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.1 times estimated earnings on average, compared with 12.2 times for the S&P 500 and 9.6 times for the Stoxx 600.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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