Asian Stocks Rise on Central Banking Easing Bets

Asian stocks rose a third day, with the regional benchmark index extending a three-month high, on speculation central banks from the U.S. to China will take steps to boost growth and after companies including Chimei Innolux Corp. beat estimates.

Kawasaki Kisen Kaisha Ltd. paced gains among Japanese shipping lines, rising 3.6 percent, before a report tomorrow expected to show inflation slowing in China, making room for policy easing in the world’s biggest commodities market. Sumco (3436) Corp. and other chip-related companies advanced after Goldman Sachs Group Inc. boosted its outlook for the U.S. semiconductor industry. Chimei Innolux gained 7 percent in Taiwan after the display maker reported a smaller-than-expected loss.

The MSCI Asia Pacific Index gained 0.4 percent to 120.09 as of 7:36 p.m. in Tokyo, paring gains of as much as 0.9 percent amid speculation Japanese stocks have risen too far, too fast. More than three stocks rose for every two that fell on the measure, which has gained about 10 percent from this year’s low on June 4 as Europe eased the terms of Spain’s banking bailout and global central banks cut interest rates.

“There’s expectations that global easing policies may help stem the economic slowdown,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “Investors are becoming less likely to avoid risky assets because of strong expectations Europe will overcome the crisis.”

MSCI Valuations

Asia’s regional benchmark traded at 12.3 times estimated earnings, compared with 13.6 times for the Standard & Poor’s 500 Index and 11.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Stock rose across Asia after Federal Reserve Bank of Boston President Eric Rosengren said the central bank should pursue an “open-ended” easing program of “substantial magnitude.” The Bank of Korea is set to consider cutting repurchase rates for a second straight month tomorrow and the Bank of Japan is scheduled to start a two-day policy meeting today.

Japan’s Nikkei 225 Stock Average closed 0.9 percent higher, trimming a 1.8 percent gain. The gauge had risen as much as 5.1 percent in the past three days, putting it on course for this year’s biggest weekly advance. South Korea’s Kospi Index (KOSPI) rose 0.9 percent today.

Australia’s S&P/ASX 200 Index increased 0.5 percent after home-loan approvals rose in June by the most this year as buyers responded to lower interest rates. The Reserve Bank of Australia has cut its key rate 1.25 percentage points since November.

China Inflation

Hong Kong’s Hang Seng Index slipped less than one percent, while the Shanghai Composite Index gained 0.2 percent.

“Short term, we won’t be surprised to see a pull-back,” said Norman Chan, Hong Kong-based head of investment at Calibre Asset Management Ltd., a unit of National Australia Bank Ltd. “Medium to long term, we think there is continued upside, especially if the European situation continues to improve.”

Data tomorrow is expected to show China’s consumer price index climbed at a slower pace for a fourth month to 1.7 percent in July from 2.2 percent a month earlier, according to economist estimates. It would be the lowest inflation since January 2010. A commentary today in China’s Financial News said moderating price gains leaves gives “bigger” room for stimulus.

Separate reports may show retail sales slipped and industrial production in the world’s second-largest economy grew less 10 percent for a fourth month, a level not seen since the 2009 financial crisis.

Earnings Season

Of the 350 companies that have reported earnings on the MSCI Asia Pacific Index (MXAP) since July 1 for which Bloomberg has compiled analysts’ projections, fewer than half have beat expectations.

Semiconductor-related firms rose after Goldman Sachs recommended investors buy U.S. companies in the sector, citing low inventories and reasonable price-to-earnings ratios. Asian chip companies face stiffer competition, the investment bank said in a note yesterday.

Sumco, a Japanese maker of silicon wafers that has lost about 40 percent of its value since March, gained 1.5 percent to 594 yen. Macronix International Co., a manufacturer of integrated circuits, increased 6.9 percent to NT$7.55 in Taiwan.

Samsung Electronics Co., the world’s biggest producer of computer memory, climbed 2 percent to 1.32 million won. SK Hynix Inc., the second largest, rose 3.4 percent to 22,750 won.

Sharp Corp. (6753) increased 2.7 percent to 188 yen after the Nikkei newspaper reported that Hon Hai Precision Industry Co. remains committed to a partnership with the Japanese maker of displays, which last week widened its loss forecast. The shares are trading near the lowest since at least 1974 after sliding about 70 percent this year.

To contact the reporters on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

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

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