Asian stocks rose this week, with the benchmark index posting its longest weekly winning streak since March, after China’s Premier Wen Jiabao said there’s more room to adjust monetary policy and U.S. economic reports signaled strength in the world’s largest economy.
Fanuc Corp. (6954), a maker of industrial robots used in Chinese factories, gained 5.8 percent this week in Tokyo. Honda Motor Co., which depends on North America for more than 40 percent of its sales, climbed 5.8 percent. Nan Ya Printed Circuit Board Corp., a Taiwanese maker of computer hardware, surged 12 percent after a report the industry will grow. China Mobile (941) Ltd., the world’s biggest phone company by subscribers, sank 7.8 percent in Hong Kong as profit growth slowed.
The MSCI Asia Pacific Index (MXAP) rose for a third-straight week, gaining 0.2 percent to 120.74 in its longest winning streak since the five days ended March 2. Through yesterday, the Asia- Pacific benchmark has retreated more than 6 percent from a Feb. 29 high amid concern China’s economy is slowing and Europe’s debt crisis is deepening.
“The global central banks’ attitude to prevent economies from falling into a serious slowdown is helping investor sentiment,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo, which oversees about $6.7 billion. “Data that would signal a rebound in the U.S. economy and steady personal spending is positive.”
Stocks on the index, which includes companies from emerging countries, were valued at about 12.6 times estimated earnings on average, compared with about 13.7 times for the Standard & Poor’s 500 Index and 11.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average (NKY) gained 3.1 percent this week, even after the nation’s economic growth slowed in the three months through June and missing the analyst estimates. Shares moved higher after Bank of Japan’s last meeting showed policy makers weren’t ruling out any options to boost growth.
Hong Kong’s Hang Seng Index (HSI) slid 0.1 percent, while China’s Shanghai Composite Index fell 2.5 percent. Taiwan’s Taiex Index gained 0.4 percent. South Korea’s Kospi Index was little changed in a week that was shortened by a holiday.
Singapore’s Straits Times Index (FSSTI) added 0.3 percent after its exports rose more than economists estimated in July as companies shipped more electronics and petrochemicals and sold more goods to China.
China’s state radio reported Wen as saying there’s growing room for monetary policy operation. “We have the conditions and capabilities, and will be sure to fulfill this year’s economic and social development targets,” Wen said during a two-day inspection tour to the eastern province of Zhejiang, the official Xinhua News Agency reported on Aug. 15.
The comments may bolster speculation China will cut banks’ reserve requirements or benchmark interest rates again after inflation slowed to a 30-month low in July, export growth collapsed and new yuan loans trailed estimates. A report on Aug. 16 showed foreign direct investment in China fell to the lowest level in two years in July.
“The premier seldom makes such direct remarks, but he might want to emphasize that government wants to support the economy by monetary policies,” said Kiyoshi Ishigane, a Tokyo- based strategist at Mitsubishi UFJ Asset Management Co., which oversees about $70 billion. “Wen’s remarks are pushing it, and that’s a positive catalyst for the markets.”
Fanuc gained 5.8 percent to 13,410 yen in Tokyo. Komatsu Ltd. (6301), a Japanese construction-equipment maker that gets about 10 percent of its revenue from China, advanced 6.8 percent to 1,791 yen. China Resources Power Holdings Co., the third-biggest listed mainland electricity producer, climbed 3 percent to HK$16.38 in Hong Kong.
In the U.S., retail sales climbed more than forecast in July as consumer spending rebounded at department stores, auto dealers and electronics outlets. A separate report showed American builders took out more residential construction permits in July than at any time in the past four years, a sign the market will continue to improve.
Shares also rose after German Chancellor Angela Merkel reiterated her commitment to working with the European Central Bank. The ECB’s insistence on conditionality in return for help to lower borrowing costs in indebted countries matches her country’s priorities to end the crisis in the euro region, she said in Ottawa on Aug. 16.
“Investor sentiment is moving to risk-on from risk-off globally,” said Ichiro Takamatsu, a fund manager at Tokyo-based Bayview Asset Management Co., which manages about $1.9 billion. “The U.S. economy is back on a recovery track. Positive remarks from the German Chancellor are a benefit for the markets.”
Honda gained 5.8 percent to 2,642 yen in Tokyo. Techtronic Industries Co., the maker of Ryobi power tools that gets 72 percent of revenue from the U.S., climbed 4.7 percent to HK$11.20 in Hong Kong.
Nan Ya Printed Circuit Board jumped 12 percent to NT$54.30 in Taipei after MoneyDJ said Taiwan’s third-quarter printed circuit board value is projected to rise 8.4 percent from the previous quarter, citing research by state-supported Industrial Technology Research Institute.
BlueScope Steel Ltd. (BSL), Australia’s largest mill, soared 54 percent to 40 Australian cents in Sydney after agreeing to sell some of its operations to Nippon Steel Corp. The Japanese company rose 6.6 percent to 177 yen this week.
Among stocks that fell, China Mobile slumped 7.8 percent to HK$83.65 in Hong Kong. Profit in the three months ended in June fell to 34.40 billion yuan ($5.4 billion) from 34.42 billion yuan a year earlier, according to figures derived by Bloomberg News from half-year numbers reported Aug. 16. That missed the projection of 35.6 billion yuan, the median of nine analysts’ estimates in a Bloomberg News survey.
Of the 440 companies in the Asia-Pacific index that have reported quarterly earnings since May 16, and for which Bloomberg has estimates, about 55 percent have failed to meet projections.
“Markets are moving to a more risk-on phase,” said Tim Schroeders, a portfolio manager who helps oversee $1 billion in equities at Pengana Capital Ltd. in Melbourne. “The U.S. recovery seems more robust than people had thought previously. Investors in Asia are still waiting for earnings to justify valuations.”
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