Asia Stocks Rise This Week on China, U.S. Data and Yen’s Slide

Asian stocks rose this week, with the benchmark index capping its eighth gain in nine weeks, as economic reports in the world’s two largest economies beat estimates and as a weaker yen boosted Japan’s exporters.

Sony Corp. (6758), an exporter of consumer electronics, surged 17 percent this week in Tokyo after announcing the sale of its New York headquarters for $1.1 billion. Li & Fung Ltd. (494), a supplier to Wal-Mart Stores Inc., dropped 14 percent in Hong Kong after saying operating income slumped 40 percent last year.

The MSCI Asia Pacific Index (MXAP) rose 0.7 percent to 132.72 this week after last week snapping a seven-week winning streak. The regional gauge is extending its two-month rally amid signs U.S. and Chinese economies are recovering and amid surge in Japanese stocks on speculation Prime Minister Shinzo Abe will pursue more aggressive stimulus policies.

“This rally can continue as the economic recovery in China and the U.S. will support company earnings,” said Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $70 billion. “Everyone seems to be bullish on the Japanese market, which also supports sentiment around Asia. The weaker yen will boost Japanese exporters’ earnings.”

Stocks on Asia’s benchmark index were valued at 14.3 times estimated earnings on average, compared with about 13.4 times for the Standard & Poor’s 500 Index and 12.1 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Yen Correlation

Japan’s Nikkei 225 Stock Average (NKY) gained 1 percent this week, while the broader Topix Index capped its longest weekly winning streak since 1986 as the yen fell to a 2 1/2 year low against the dollar. A weaker yen boosts overseas income at Japanese companies when converted into their home currency.

The Topix is more sensitive to movements in the currency than it’s been since 1988, according to data compiled by Bloomberg. Two days of gains by the yen in midweek prompted steep losses in the country’s equity markets, knocking $106 billion from the value of Japanese companies.

Credit Suisse Group AG raised Japan’s growth forecast for this year to 1.2 percent from 0.3 percent on yen depreciation and Abe’s policies.

Hong Kong’s Hang Seng Index (HSI) gained 1.5 percent this week. China’s Shanghai Composite Index gained 3.3 percent after data showed the economy accelerated more than estimated in the fourth quarter, with industrial output picking up.

Shares also climbed after China’s securities regulator said the nation can increase by 10 times the size of two investment programs that allow foreign investors to buy securities.

Home Starts

South Korea’s Kospi Index (KOSPI) slid 0.4 percent, while Taiwan’s Taiex Index decreased 1.1 percent. Australia’s S&P/ASX 200 Index climbed 1.3 percent even as home-loan approvals unexpectedly dropped in November.

In the U.S., data showed builders started more houses than forecast in December and first-time claims for unemployment benefits fell more than forecast last week.

Honda Motor Co. (7267), a Japanese carmaker that receives about 43 percent of sales from North America, gained 1.8 percent to 3,440 yen in Tokyo. Toyota Motor Corp., the country’s No. 1 car producer, rose 0.9 percent to 4,300 yen, the highest since October 2008.

Sony surged 17 percent to 1,149 yen. The company’s U.S. unit said it agreed to sell its New York headquarters for $1.1 billion to investors led by the Chetrit Group.

Developers led gains in Hong Kong as the city’s Chief Executive Leung Chun-ying failed to outline harsh measures to combat soaring property prices in his first policy address.

Billabong Bid

Cheung Kong Holdings Ltd., controlled by billionaire Li Ka Shing, advanced 3.7 percent to HK$130.60. New World Development Co., which recorded the biggest gain in the Hang Seng Property Index (HSP) in 2012, added 4.8 percent to HK$14.36 the highest since January 2011.

Billabong International Ltd. (BBG) surged 19 percent in Sydney as Australia’s largest surfwear maker received a takeover offer. The company, which gets almost half its revenue from the Americas, said it received a takeover offer from VF Corp. and Altamont Capital Partners that matches a A$527 million ($556 million) bid from Paul Naude, a director.

Among stocks that fell, Li & Fung tumbled 14 percent to HK$11.94 in Hong Kong after saying its operating income slumped 40 percent in 2012 as margins and orders weakened in its U.S. business.

GS Yuasa Corp. (6674), a battery supplier to Boeing Co., dropped 6.5 percent to 315 yen in Tokyo after U.S. regulators ordered airlines to prove the batteries are safe. A 787 operated by All Nippon Airways Co. this week made an emergency landing after pilots saw smoke in the cockpit and a Japan Airlines Co. Dreamliner had a battery fire last week.

“I’d stay positive on equities as the environment remains conducive,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “Global leading indicators are turning up and interest rates remain quite low. In the short-term, there’s scope for investors to take some profit off the table.”

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