Asia Stocks Pare Gain as China PMI Tempers Japan Surplus

Asian stocks rose after Japan posted an unexpected trade surplus and as a survey that showed China’s manufacturing may contract this month stoked speculation the government may introduce more measures to bolster growth.

First Tractor Co., a Chinese maker of farm equipment, jumped 7.6 percent in Hong Kong after the mainland’s central bank cut reserve requirements to more branches of Agricultural Bank of China Ltd. Samsung Electronics Co. (005930), Asia’s No.1 consumer-electronics maker that counts China as its biggest market, gained 1.3 percent in Seoul. Honda Motor Co., Japan’s second-largest carmaker, added 1.7 percent in Tokyo.

“I don’t see a hard landing happening in China this year because of the policy offsets that can be put in place,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “China’s housing sector remains a key concern. The anecdotes coming out of the housing market suggest the weakness is quite pronounced.”

The MSCI Asia Pacific Index rose 0.4 percent to 126.64 as of 8:39 p.m. in Tokyo. The gauge pared initial gains of as much 0.8 percent after a purchasing managers’ survey by HSBC Holdings Plc and Markit Economics showed Chinese manufacturing contracted for a fifth straight month, the longest period since the global financial crisis.

Japan’s Nikkei 225 Stock Average (NKY) gained 0.4 percent after swinging between gains and losses. The government reported an unexpected trade surplus for February and higher-than-expected exports, adding to evidence of a rebound in the world’s third- biggest economy. Australia’s S&P/ASX 200 Index advanced 0.5 percent. South Korea’s Kospi Index slipped 0.1 percent.

China Manufacturing

Hong Kong’s Hang Seng Index (HSI) added 0.2 percent, having swung between losses of as much as 0.3 percent and gains of as much as 0.6 percent. China’s Shanghai Composite Index dropped 0.1 percent.

China’s manufacturing index indicated a worse contraction this month, bolstering the case for Premier Wen Jiabao to add measures to sustain growth even as he prolongs a campaign to cool property prices. The preliminary 48.1 reading in a purchasing managers’ index from HSBC and Markit Economics today is the lowest since November and compares with a final 49.6 in February. A result below 50 indicates a contraction.

“Growth momentum could slow down further amid a combination of sluggish export new orders and softening domestic demand, and this calls for further easing steps,” said Qu Hongbin, Hong Kong-based chief economist for China at HSBC.

Rural Lending

China’s central bank move to bolster rural lending by cutting the reserve requirements for an additional 379 branches of Agricultural Bank of China Ltd. (601288), the nation’s third-biggest lender by market value. The move expands a trial that previously lowered requirements for 563 branches in eight provinces and means a total of 23 billion yuan ($3.6 billion) has been freed up, the People’s Bank of China said yesterday.

First Tractor climbed 7.6 percent to HK$7.93 in Hong Kong. China Minsheng Banking Corp. (1988), the nation’s first privately owned bank, advanced 1 percent HK$7.21. Samsung Electronics gained 1.3 percent to 1.258 million won in Seoul.

Futures on the Standard & Poor’s 500 Index fell 0.6 percent today. The gauge slid 0.2 percent in New York yesterday on concern the best first quarter since 1998 has outpaced economic prospects. Federal Reserve Chairman Ben S. Bernanke told Congress that higher energy prices may weaken the U.S. economy by sapping consumer spending.

Exporters Advance

Exporters gained as sales of previously owned U.S. houses held in February near an almost two-year high, adding to evidence the market that triggered the recession is firming. A report yesterday showed purchases of previously owned homes dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January.

Honda Motor increased 1.7 percent to 3,275 yen in Tokyo. Nintendo Co., the maker of Wii game consoles, climbed 3.4 percent to 13,020 yen. James Hardie Industries SE (JHX), the building materials supplier that counts the U.S. as its biggest market, added 1.2 percent to A$7.71.

The MSCI Asia Pacific Index climbed 11 percent this year through yesterday as signs the U.S. economy is improving boosted confidence in the outlook for Asia’s exporters. The rally boosted the value of stocks on the gauge to 14.9 times estimated earnings on average, compared with 13.5 times for the S&P 500 and 11.2 times for the Stoxx 600.

Pegatron Jumps

Pegatron Corp. (4938) jumped 7 percent to NT$45.40, the most on the MSCI Asia Pacific Index, as brokerages from Yuanta Financial Holding Co. to Nomura Holdings Inc. raised their stock estimates after the company posted fourth-quarter profit that beat analysts’ estimates.

Of the 612 companies on the MSCI Asia Pacific Index (MXAP) that reported net income since Jan. 9, 56 percent missed analysts’ estimates, data compiled by Bloomberg showed.

Agricultural Bank of China slipped 1.1 percent to HK$3.52, erasing gains of as much as 2 percent, before the release of its full-year results. After market close, the lender said 2011 profit rose 29 percent to 121.9 billion yuan. That fell short of the 129.6 billion-yuan average estimate of 20 analysts in a Bloomberg survey.

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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