Asian Stocks Extend 18-Month High on Global Outlook

Asian stocks rose for a third day, with the regional benchmark index extending an 18-month high, amid signs the global economy is recovering.

South Korea’s Kospi Index led benchmark gauges higher after Bank of Korea Governor Kim Choong Soo said the world economic outlook is improving. Tokyo Electric Power Co. led gains among Japanese utilities. BHP Billiton Ltd., the world’s largest mining company, fell 0.9 percent in Sydney after reporting a 58 percent drop in first-half profit. Woodside Petroleum Ltd., Australia’s second-biggest producer of oil and gas, added 3.1 percent after full-year profit almost doubled.

The MSCI Asia Pacific Index added 1 percent to 135.44 as of 7:44 p.m. in Tokyo after closing yesterday at the highest level since August 2011. More than two stocks climbed for each that fell. The gauge is headed for a third day of gains, the longest winning streak since Jan. 4.

“In general, the big picture is much better than last year,” said Grace Tam, Hong Kong-based global market strategist at JPMorgan Asset Management Ltd., which oversees about $1.3 trillion globally. “In the medium term, we are still pretty positive on equities because monetary policies are pretty easy around the world.”

The MSCI Asia Pacific Index advanced 9.9 percent from the start of November through yesterday, led by Japanese shares as Prime Minister Shinzo Abe pledged to beat deflation and pressed the central bank to ease monetary policy. Asia’s benchmark traded at 14.9 times estimated earnings as of yesterday compared with 13.8 for the Standard & Poor’s 500 and 12.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average gained 0.8 percent even after the government reported a record trade deficit in January. South Korea’s Kospi Index added 2 percent as Kim said the improving world economy boosts the odds of the nation exceeding this year’s growth forecast.

Australia’s S&P/ASX 200 Index advanced 0.3 percent. New Zealand’s NZX 50 Index fell 0.7 percent as Fletcher Building Ltd., the most heavily weighted stock on the gauge, dropped 4.8 percent to NZ$8.87 in Wellington after saying robust local growth was being offset by a sluggish Australian building market.

Hong Kong’s Hang Seng Index rose 0.7 percent, while China’s Shanghai Composite Index gained 0.6 percent. Taiwan’s Taiex Index added 0.9 percent and Singapore’s Straits Times Index climbed 0.4 percent.

U.S. Futures

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge added 0.7 percent to close at the highest level since 2007 in New York yesterday on optimism over deal making and data showing rising investor confidence in Germany.

U.S. office supply retailers Office Depot Inc. and OfficeMax Inc. have discussed a merger and may announce a deal as early as this week, a person familiar with the matter said. German investor confidence jumped more than economists forecast in February to the highest level in almost three years, the ZEW Center for European Economic Research in Mannheim said yesterday.

“We will continue to rally until markets find something that spooks them,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which manages about $1 billion. “Data in Europe -- even if you are pessimistic -- you’d have to conceive that they are stabilizing and there are points of improvement. There’s nothing you can point to as negative.”

South Korea’s Kospi capped a six-day rally, the longest since October 2011. Samsung Electronics Co., the nation’s biggest exporter of consumer electronics and the most heavily weighted stock on the measure, rose 3.6 percent to 1.545 million won.

Japanese Utilities

Japanese power providers rallied after the Nikkei newspaper reported Prime Minister Abe will inform U.S. President Barack Obama during their Feb. 22 meeting that Japan will reconsider the previous government’s commitment to abandon nuclear power.

Tokyo Electric gained 9.7 percent to 215 yen, the biggest gain on the MSCI Asia Pacific Index. Shikoku Electric Power Co., which expects to restart a reactor at its nuclear plant in July, surged 7.3 percent to 1,130 yen.

Of the 343 companies on the MSCI Asia Pacific Index that have reported quarterly earnings and for which Bloomberg has estimates, 50 percent exceeded profit expectations.

BHP Chief

BHP Billiton slid 0.9 percent to A$38.65 after reporting a 58 percent decline in first-half profit. It named copper unit head Andrew Mackenzie to succeed Chief Executive Officer Marius Kloppers, who failed to deliver on about $200 billion of potential takeovers.

Woodside Petroleum added 3.1 percent to A$39.07 after saying its net income rose to a record $2.98 billion in the 12 months ended Dec. 31 from $1.51 billion a year earlier. The increase was driven by the A$15 billion ($15.5 billion) Pluto liquefied natural gas project in Western Australia.

Among other stocks that gained, PetroChina Co. rose 2.9 percent to HK$10.74 in Hong Kong after UBS AG recommended buying shares of Asia’s biggest oil producer.

Nippon Paper Group Inc. paced gains among Japanese paper companies as the sector’s rating was raised to overweight at Mitsubishi UFJ-Morgan Stanley Securities Co. The stock jumped 8.3 percent to 1,461 yen. Oji Holdings Corp. added 5.6 percent to 339 yen.

To contact the reporter on this story: 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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