Asian Stocks Rise on China PMI Expansion, Fed Bond Buying

Photographer: Kiyoshi Ota/Bloomberg

A visitor looks at an electronic board displaying stock figures at Japan Exchange Group Inc.'s Tokyo Stock Exchange (TSE) in Tokyo. Close

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Photographer: Kiyoshi Ota/Bloomberg

A visitor looks at an electronic board displaying stock figures at Japan Exchange Group Inc.'s Tokyo Stock Exchange (TSE) in Tokyo.

Asian stocks rose, paring this week’s loss, as a gauge of China’s manufacturing unexpected expanded and after the Federal Reserve maintained its bond-buying program at current levels.

Panasonic Corp., Japan’s largest consumer electronics maker, climbed 6.8 percent after posting profit that beat estimates. STX Offshore & Shipbuilding Co. (067250) jumped 15 percent in Seoul after agreeing to restructure it debt. Commonwealth Bank of Australia (CBA), the nation’s biggest lender, fell 1.5 percent, pacing losses among the nation’s financial shares on a report the government will impose a new tax on banks.

The MSCI Asia Pacific Index advanced 1.2 percent to 133.85 as of 7:23 p.m. in Tokyo, with all 10 industry groups on the gauge rising. Almost three shares gained for each that fell on the measure, which is headed for a 1.1 percent loss this week. Futures on the Standard & Poor’s 500 Index added 0.7 percent.

“The market consensus is that China’s economy is slowing, but it won’t crash,” Koji Toda, chief fund manager at Resona Bank Ltd., Japan’s fifth-largest lender by market value, said in Tokyo. “Japanese stocks are rebounding after dropping yesterday, with individual shares moving according to earnings.”

Stimulus Maintained

The Federal Open Market Committee, which has floated the prospect of reductions to its $85 billion of monthly bond purchases should economic risks abate, said yesterday that while growth should pick up, persistently low inflation may hamper the recovery. The statement came as data showed U.S. gross domestic product expanded more than economists estimated last quarter. Policy makers in Europe and England are due to review interest rates today.

China’s Purchasing Managers’ Index rose to 50.3 in July, the National Bureau of Statistics and China Federation of Logistics & Purchasing said today in Beijing. That compared with the 49.8 median forecast of 35 analysts surveyed by Bloomberg News and June’s 50.1 level. Readings above 50 indicate expansion in manufacturing.

The Shanghai Composite Index (SHCOMP) advanced 1.8 percent, extending gains for a second day. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong increased 0.7 percent.

Hang Seng

Hong Kong’s benchmark Hang Seng Index added 0.9 percent. The city’s benchmark index fell 2.5 percent this year, the worst performance among developed markets tracked by Bloomberg.

Japan’s Topix index increased 2.8 percent, while the benchmark Nikkei 225 Stock Average advanced 2.5 percent. South Korea’s Kospi index gained 0.4 percent and Singapore’s Straits Times Index rose 0.7 percent. New Zealand’s NZX 50 Index added 0.2 percent. Taiwan’s Taiex index slid 0.6 percent.

The Topix climbed 35 percent this year amid optimism Prime Minister Shinzo Abe will push through reforms while the Bank of Japan continues record stimulus to beat deflation. The gauge traded at 1.2 times book value, compared with 2.5 times for the S&P 500 (SPX) and 1.7 for the Stoxx Europe 600 Index.

Australia’s S&P/ASX 200 Index (AS51) rose 0.2 percent, paring earlier gains of as much 0.8 percent, as lenders dropped after the Financial Review reported the government may introduce a tax to fund its guarantee on bank deposits.

India Manufacturing

India’s S&P BSE Sensex lost 0.2 percent. The nation’s manufacturing PMI weakened to 50.1 in July from 50.3 in June, according to a report by HSBC Holdings Plc and Markit Economics.

The MSCI Asia Pacific Index advanced 1.3 percent last month after China pledged to do more to support a transition from reliance on exports to domestic demand in the world’s second-largest economy. The regional gauge rose 2.2 percent this year through yesterday.

U.S. Economy

The S&P 500 closed little changed yesterday in New York, erasing an earlier rally after the Fed statement and a report showing the economy grew at an annualized rate of 1.7 percent in the second quarter, faster that the 1.1 percent pace in the prior three months.

“The Fed moved back slightly to the dovish side,” Evan Lucas, a Melbourne-based market strategist at IG Markets Ltd., a provider of trading services for equities, currencies and commodities, said by telephone. “The U.S. economy does look like it’s growing a bit stronger and the Fed hasn’t said when it will announce tapering.”

Panasonic climbed 6.8 percent to 909 yen in Tokyo. First-quarter net income surged more than eightfold to 108 billion yen ($1.1 billion), the Osaka-based company said yesterday. That beat the 14 billion-yen estimates of five analysts surveyed by Bloomberg. A one-time gain of 79.8 billion yen from pension accounting boosted earnings.

Earnings Season

Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded lender, rose 4 percent to 625 yen after posting first-quarter profit that topped estimates. Mizuho Financial Group Inc., whose earnings also exceeded expectations, advanced 4.9 percent to 213 yen.

Of the 252 companies on the MSCI Asia Pacific Index that have posted results since July 1 and for which estimates are available, 51 percent exceeded estimates, according to data compiled by Bloomberg. More than 90 companies on the gauge are posting results this month. Mitsubishi Corp. and Toyota Motor Corp. are scheduled to report tomorrow.

STX Offshore & Shipbuilding jumped 15 percent to 6,260 won in Seoul. Creditors agreed to provide fresh funding under a debt-restructuring deal aimed at normalizing the shipbuilder’s operations, the company said yesterday.

Australian banks declined. Commonwealth Bank of Australia, dropped 1.5 percent to A$73.12. Australia & New Zealand Banking Group Ltd. slipped 1.2 percent to A$29.39.

PT Bank Danamon Indonesia tumbled 14 percent to 4,450 rupiah after DBS Group Holdings Ltd. ended a $6.5 billion bid to control the Southeast Asian nation’s six-largest lender by assets.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; 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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