Asia Stocks Near Two-Year High as Investors Weigh Results

Asian stocks rose, with energy companies leading the regional benchmark index toward its highest level since May 2011, as investors weighed earnings reports.

China Petroleum & Chemical (386) Corp., the nation’s largest refiner, increased 2 percent after Morgan Stanley said China’s cut in fuel prices will benefit the company. Nippon Electric Glass Co. led gains among Japanese glass makers after industry bellwether Corning Inc. forecast growth. Nintendo Co., the world’s biggest maker of game machines, slumped 5.9 percent in Osaka after missing sales targets for its consoles.

The MSCI Asia Pacific Index added 0.9 percent to 140.23 at 7:27 p.m. in Tokyo, with about five shares rising for every three that fell. The gauge is headed for its highest close since May 2, 2011.

“We have to look at earnings and wait to see if the first- quarter earnings are really good or bad,” said Grace Tam, Hong Kong-based global market strategist at JPMorgan Asset Management Ltd., which oversees about $1.3 trillion globally. “In Asia, we don’t have an inflation threat. Inflation has been pretty benign and this is a positive factor for Asian equities because Asian economies are net importers of oil.”

The MSCI Asia Pacific Index gained 7.4 percent this year through yesterday amid optimism Japan will deploy more measures to beat deflation and that policy makers in the U.S. and China remain on standby to support growth. The Asian benchmark traded at 14.1 times estimated earnings yesterday, compared with 14.3 times for the S&P 500 and 12.8 times for the Stoxx Europe 600 Index.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average climbed 0.6 percent after slipping 0.1 percent, and the broader Topix Index added 0.7 percent, while data showed foreign investors were net sellers of the nation’s equities last week. The Kospi Index (KOSPI) increased 0.8 percent as South Korea’s economy grew the most in two years in the first quarter. Markets in Australia and New Zealand were closed for a public holiday.

Hong Kong’s Hang Seng Index (HSI) climbed 1 percent and China’s Shanghai Composite Index declined 0.9 percent. Taiwan’s Taiex Index was little changed.

More than 60 companies on the MSCI gauge are scheduled to report earnings today, according to data compiled by Bloomberg. Of the 88 firms which have reported quarterly results since April 1, and for which Bloomberg has estimates, 40 have exceeded profit forecasts and 48 missed projections.

Investors are weighing how the yen’s decline will improve the earnings outlook for Japanese exporters.

Yen, BOJ

The yen has declined against all 16 of its major counterparts since April 4, when the Bank of Japan (8301) said it will double the amount of money circulating in the economy by the end of 2014 by buying government bonds, its boldest round of quantitative easing. The BOJ will convene tomorrow.

“A weaker yen is helping Japanese companies, but you need to look at each stock to figure out if the yen’s drop is coming on top of a company’s solid business or it’s being overshadowed by poor performance,” said Toshihiko Matsuno, a strategist at Tokyo-based SMBC Friend Securities Co., a unit of Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender by market value.

Futures on the Standard & Poor’s 500 Index (SPXL1) climbed 0.2 percent today. The index rose just 0.01 point yesterday in New York, as investors weighed quarterly earnings.

China, the world’s second-biggest oil consumer, cut gasoline and diesel prices today after crude declined earlier this month. Retail gasoline falls by 395 yuan ($64) a metric ton and diesel by 400 yuan, the National Development and Reform Commission, the country’s top economic planner, said on its website yesterday.

Sinopec, Cnooc

China Petroleum & Chemical known as Sinopec rose 2 percent to HK$8.53. Cnooc Ltd., China’s biggest offshore oil producer, gained 2.9 percent to HK$14.44. PetroChina Co., the nation’s largest energy producer and Asia’s No. 1 company by value, advanced 1.4 percent to HK$9.69.

Japanese glassmakers gained after Corning, which makes glass for flat-panel televisions, phones and tablets, forecast growth in its telecommunications products as it benefits from surging sales of smartphones and tablets. Nippon Electric Glass, Japan’s second-biggest glassmaker by market value, climbed 7.1 percent to 525 yen. Asahi Glass Co., the largest, advanced 2.9 percent to 793 yen.

Among stocks that fell, Nintendo dropped 5.9 percent to 11,240 yen after saying it sold 3.45 million of its Wii U game machines in the fiscal year ended March 31, below a 4 million- unit target it set in January and an initial projection of 5.5 million.

Canon Inc. (7751), the world’s biggest camera maker, slid 6.4 percent to 3,595 yen after its profit forecast missed analyst estimates on slumping demand for compact models. Net income will probably be 290 billion yen in 2013, the Tokyo-based company said in a statement yesterday, missing the 308 billion-yen average of 20 analyst estimates compiled by Bloomberg.

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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