Asia Stocks Gain This Week on U.S. Data, China Policy Optimism

Asian stocks rose this week, with the benchmark index posting its biggest weekly gain since January, as economic data from the U.S. boosted confidence in the world’s largest economy amid speculation China will do more to support growth.

Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, rose 3.4 percent this week in Tokyo. Rio Tinto Group, the world’s third-largest mining company, jumped 8.5 percent in Sydney after earnings beat estimates. Aluminum Corp. of China Ltd., the nation’s No. 1 supplier of the light metal, gained 7.3 percent in Hong Kong as commodity prices advanced. DeNA (2432) Co., the Japanese operator of the Mobage social gaming network, soared 27 percent after its operating profit beat analyst estimates.

The MSCI Asia Pacific Index (MXAP) rose 3 percent to 120.50 this week, its biggest weekly advance since the five days ended Jan. 20. The gauge pared its gain on Aug. 10 as reports showed China’s exports and new lending missed estimates and Singapore’s economy unexpectedly contracted in the second quarter.

For the U.S., “expectations have been cut substantially, so even a weak number will appear to be a good number,” said Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors, which manages $250 billion globally. “If you look at policy noise out of China, it is kind of turning to supporting growth. Markets are reasonably cheap.”

The Asia-Pacific measure retreated 8.5 percent from a Feb. 29 high through yesterday as Europe’s deepening debt crisis and slower growth in the U.S. and China damped the outlook for global demand.

Relative Value

Stocks on the index were valued at about 12.4 times estimated earnings on average, compared with about 13.6 times for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Japan’s Nikkei 225 Stock Average gained 3.9 percent this week, its biggest weekly gain since February, even after the Bank of Japan refrained from adding stimulus to the economy and machinery orders in the nation rebounded less than forecast.

Hong Kong’s Hang Seng Index (HSI) climbed 2.4 percent, while China’s Shanghai Composite Index rose 1.7 percent. Taiwan’s Taiex Index advanced 3.1 percent, while South Korea’s Kospi Index jumped 5.3 percent after the nation left its key interest rate unchanged.

Australia’s S&P/ASX 200 Index gained 1.3 percent. The nation’s employers added more jobs last month than economists estimated, and the Reserve Bank of Australia raised its 2012 growth forecast on stronger-than-expected consumer demand.

Singapore Growth

Singapore’s Straits Times Index (FSSTI) gained 0.1 percent in a week that was shortened by a holiday. The city state on Aug. 8 cut the upper end of its economic growth forecast for 2012 amid the global slowdown.

Shares in Asia rose this week after a Labor Department report showed U.S. payrolls climbed more than forecast even as the jobless rate unexpectedly rose. Growth in the services industry accelerated from a month earlier in July.

The rally in stocks gained strength as members of German Chancellor Angela Merkel’s coalition parties signaled they won’t stand in the way of European Central Bank President Mario Draghi’s bond plan to relieve the region’s debt crisis.

Toyota climbed 3.4 percent to 3,170 yen in Tokyo this week, while Samsung Electronics Co., which gets 39 percent of its sales in Europe and the Americas, rose 8.5 percent to 1.348 million won in Seoul. Techtronic Industries Co. (669), the maker of Ryobi power tools that gets 72 percent of revenue from the U.S., climbed 5.5 percent to HK$10.70 in Hong Kong.

‘Still Weak’

China’s inflation cooled for a fourth month. Consumer prices rose 1.8 percent from a year earlier in July, after a gain of 2.2 percent in June, the National Bureau of Statistics said on Aug. 9. China’s producer-price index fell 2.9 percent, while industrial production grew 9.2 percent from a year earlier in July, missing the median analyst estimate of 9.7 percent.

“Asia’s economy is still weak, but as liquidity returns to risky assets in U.S. and Europe, it’s coming into this region as well,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees the equivalent of $190 billion. “China’s inflation has calmed, making it easier for policy measures to happen. There’s some optimism Asia’s economies will improve.”

Bank of Communications Co., the mainland’s fifth-largest lender, rose 1.7 percent to HK$5.27 in Hong Kong. Poly (Hong Kong) Investments Ltd., which develops, invests and manages properties in China, jumped 8.6 percent to HK$4.30. Komatsu Ltd., a Japanese construction-equipment maker that gets about 12 percent of its revenue from China, climbed 3.5 percent to 1,677 yen in Tokyo.

Energy Stocks

Rio Tinto (RIO) jumped 8.5 percent to A$56.45 in Sydney after its first-half profit of $5.9 billion beat the $5.04 billion average of analyst estimates compiled by Bloomberg. Inpex Corp., Japan’s top energy explorer, gained 9.5 percent to 468,500 yen in Tokyo after raising its full-year earnings forecasts. Aluminum Corp. of China jumped 7.3 percent to HK$3.40 in Hong Kong.

Of the 390 companies in the Asia-Pacific index that have reported earnings since May 16, and for which Bloomberg has estimates, 55 percent have failed to meet projections.

DeNA soared 27 percent to 2,210 yen in Tokyo, jumping by the most yesterday, after posting an operating profit of 18.4 billion yen ($235 million) for the three months ended June 30, beating the 17.6 billion yen average of analyst estimates compiled by Bloomberg.

Li & Fung Ltd. (494), a supplier of clothes and toys to retailers, plunged 12 percent to HK$12.90 in Hong Kong after slowdowns in U.S. and Europe caused a 22 percent slump in first half operating profit.

Among other stocks that fell, Oki Electric Industry Co. (6703), which through Aug. 8 was the best-performing stock this year in the Nikkei 225 Stock Average (NKY), plunged 22 percent to 91 yen. The ATM maker said its Spain unit overstated accounts and it will miss the deadline for filing financial reports, prompting the Tokyo bourse to put the company on watch for possible delisting.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

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

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