Asian stocks rose, with the regional benchmark index posting its seventh weekly advance, after the U.S. Congress passed legislation on a budget deal and manufacturing reports from China and the U.S. added to signs of a global recovery.
Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., jumped 7.3 percent in Hong Kong. Rio Tinto Group, the world’s second-largest mining company that gets about 31 percent of sales from China, gained 3 percent in Sydney as Chinese manufacturing expanded for a third month. Fairfax Media Ltd. surged 14 percent amid speculation billionaire Gina Rinehart and investor John Singleton may seek control of the newspaper publisher.
The MSCI Asia Pacific Index gained 1.8 percent to 131.89 in its seventh weekly advance, the longest such winning streak since March last year. The Nikkei 225 Stock Average jumped 2.8 percent yesterday in Japan’s first trading day of the year, closing at the highest level since March 2011. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) rose 2 percent this week.
“The global economic outlook is improving,” Shane Oliver, Sydney-based head of strategy at AMP Capital Investors Ltd., which has almost $130 billion under management, said. “That will underpin further gains in share markets along with very easy monetary conditions. That probability of the fiscal cliff and a U.S. recession has been taken out.”
Australia’s S&P/ASX 200 Index gained 1.1 percent this week. South Korea’s Kospi Index (KOSPI) added 0.8 percent. Taiwan’s Taiex Index rose 1.4 percent. Hong Kong’s Hang Seng Index climbed 2.9 percent.
The Shanghai Composite Index (SHCOMP) advanced 2 percent. A gauge of China’s manufacturing on Jan. 1 showed a third month of expansion in December, adding evidence that the recovery in the world’s second-biggest economy will extend into the new year. The nation’s services industries expanded at the fastest pace in four months, an index showed yesterday.
The regional benchmark MSCI Asia Pacific Index (MXAP) surged 14 percent in 2012 as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The Asia Pacific gauge traded at 14.1 times average estimated earnings, compared with about 13.2 times for the Standard & Poor’s 500 Index and about 11.9 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Exporters advanced as manufacturing in the U.S., a major market for Asian companies from carmakers to electronics manufacturers, expanded in December. The U.S. Congress passed budget legislation, breaking a yearlong impasse over how to head off automatic tax increases and spending cuts. Failure to resolve the so-called fiscal cliff might have dragged the U.S. economy into a recession.
Li & Fung, which gets about 60 percent of sales from the U.S., rose 7.3 percent to HK$14.50 in Hong Kong. Toyota Motor Corp. (7203), the world’s biggest carmaker, climbed 6.4 percent to 4,260 yen in Tokyo. Canon Inc., the world’s largest camera maker, increased 2.4 percent to 3,420 yen.
Japanese exporters also advanced after the yen extended losses for an eighth week against the dollar, the longest losing streak since February 1989. A weaker currency boosts the value of overseas earnings when repatriated.
Raw material producers and energy companies posted the week’s biggest advance among the 10 industry groups in the MSCI Asia Pacific Index amid signs that China, the world’s biggest consumer of energy and copper, is recovering from seven quarters of slowing economic growth.
Rio Tinto gained 3 percent to A$68.55 in Sydney. Jiangxi Copper Co. (358), China’s largest supplier of the metal, jumped 5.9 percent to HK$21.65 in Hong Kong. Cnooc Ltd., the nation’s biggest offshore oil producer, added 3 percent to HK$17.34.
Fairfax surged 14 percent to 54 Australian cents in Sydney. Shareholders Rinehart and Singleton may team up and seek control of the publishing company to pursue asset sales, said Mark McDonnell, Sydney-based analyst at BBY Ltd.
Rinehart, who failed in a bid for a board seat this year, and Singleton own 15.14 percent of Fairfax and agreed to consult on key issues related to boosting “shareholder value,” the company said on Dec. 31.
Chinese insurers advanced this week after the nation’s securities watchdog said they would be be allowed to set up mutual funds, boosting optimism that the industry will benefit from increased demand. China Life Insurance Co., the country’s biggest insurer, climbed 10 percent to HK$27.00 in Hong Kong. Ping An Insurance Group Co. rose 9.3 percent to HK$69.65.
Among stocks that fell, Japan Exchange Group Inc. slumped 9.7 percent to 3,885 yen on its trading debut on the Tokyo Stock Exchange. The company was previously listed as Osaka Securities on the Jasdaq market, where it gained 35 percent in the month before the new listing.
“Investors will probably re-evaluate the stock once they start to see the synergy from the merger,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees about $6.3 billion. “Right now there’s not much news to buy on, as the shares already rose a lot on Jasdaq.”
Sharp Corp. dropped 2.6 percent to 295 yen after the Yomiuri newspaper reported on Jan. 1 that the loss-making television maker may raise 100 billion yen ($1.1 billion). The company is considering ways to increase capital, spokesman Atsushi Yoshida said, declining to give funding details.
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