Asia Stocks Fall This Week For First Time Since June

Asian shares rose this week, driving the regional benchmark index to its sixth week of gains, as global manufacturing reports beat forecasts and central banks vowed to maintain stimulus.

Hitachi Metals Ltd. soared 20 percent after forecasting net income will more than double. Genting Malaysia Bhd., the casino operator controlled by billionaire Lim Kok Thay, jumped 13 percent. Fanuc Corp. gained 9.5 percent after the Japanese robotics maker’s orders beat estimates. AIA Group Ltd. (1299), the second-largest Asia-based insurer by market value, advanced 3.6 percent after reporting net income climbed to a record $1.93 billion in the six months to May. Samsung Electronics world’s biggest smartphone maker fell 1.3 percent as profit missed expectations.

The MSCI Asia Pacific Index edged up 0.1 percent this week to 135.59, climbing for the sixth straight week with more than two stocks gaining for every one that fell. Six of the 10 industry groups on the measure rose on the week. Japan’s market drove the advance as the benchmark Nikkei 225 Stock Average posted a 2.4 percent increase, its biggest jump in a month.

“As the yen continues to weaken, profit at Japanese exporters will improve. That should drive earnings upgrades, boosting the share market,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion. “The market will remain volatile as investors await Japan’s economic reforms.”

Regional Benchmarks

Japan’s Topix index gained 2.5 percent to 1,196.17 for the week, as the yen weakened against the dollar, boosting the earnings outlook for the country’s exporters. Of the 183 companies on the measure that have posted quarterly results and for which Bloomberg has estimates, 58 percent beat projections.

Hong Kong’s Hang Seng Index (HSI) climbed 1 percent after China’s government moved to alleviate a cash crunch as economic growth slows. The nation’s central bank injected funds into markets through reverse-repurchase agreements for the first time since February.

South Korea’s Kospi index added 0.7 percent, while Taiwan’s Taiex index fell 0.6 percent. Australia’s S&P/ASX 200 Index gained 1.5 percent and New Zealand’s NZX 50 Index was little changed for the week.

The MSCI Asia Pacific Index advanced 1.3 percent in July after China pledged to do more to support a transition from reliance on exports to domestic demand in the world’s second-largest economy. Shares on the gauge traded at 13.2 times estimated earnings as of yesterday, compared with multiples of 15.5 for the Standard & Poor’s 500 Index and 13.8 for the Stoxx Europe 600 Index.

Reverses Declines

The index reversed declines from earlier in the week after 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 on July 31 that while growth should pick up, persistently low inflation may hamper the recovery.

Factory output from the U.S. to China and Europe expanded in July, reports showed on Aug. 1, while American jobless claims fell to a five-year low. The data came as European Central Bank President Mario Draghi said interest rates will probably remain low for an extended period and after the Federal Reserve retained its $85 billion-a-month bond buying program.

China’s manufacturing gauge unexpectedly strengthened in July, data showed on Aug. 1. Manufacturing growth in the U.K. accelerated in July, while a factory gauge for the euro-area resumed growth after two years of contraction, separate reports released showed on Aug. 1.

U.S. Data

In the U.S., unemployment insurance payments declined by 19,000 to 326,000 in the week ended July 27, the fewest since January 2008, from a revised 345,000 the prior week. The Institute for Supply Management’s U.S. factory index increased to 55.4 in July, the strongest since June 2011, from 50.9 in the prior month. Readings above 50 indicate expansion.

“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.”

Hitachi Metals jumped 20 percent to 1,275 yen in Tokyo after forecasting net income will more than double following its July 1 merger with Hitachi Cable Ltd. Genting Malaysia rose 13 percent to 4.5 ringgit after announcing a $937 million revamping of its Malaysian resort and a tie-up with 21st Century Fox Inc. on a theme park.

Orders Swell

Fanuc jumped 9.5 percent to 15,990 yen after reporting first quarter orders totaled 114 billion yen, beating Nomura Holdings Inc.’s 105 billion yen estimate and JPMorgan Chase & Co.’s outlook for 97.5 billion yen.

AIA Group, the second-largest Asia-based insurer by market value, advanced 3.6 percent to HK$37.15 in Hong Kong after reporting net income climbed to a record $1.93 billion in the six months to May 31, from $1.44 billion a year earlier, helped by acquisitions and paper gains from equity investments.

Samsung Electronics fell 1.3 percent to 1.286 million won in Seoul this week. The world’s biggest smartphone maker reported net income of 7.58 trillion won ($6.7 billion) on July 26, missing the 8.02 trillion-won average of 24 analyst projections compiled by Bloomberg, as market saturation for high-end handsets curbed sales growth for its flagship Galaxy S4.

Honda Motor Co., Japan’s third-biggest automaker, sank 2.1 percent to 3,710 yen in Tokyo, after saying net income fell 7 percent to 122.5 billion yen in the three months ended June 30, from 131.7 billion yen a year earlier. That lagged behind the 149.3 billion yen-average of three analyst estimates compiled by Bloomberg.

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

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.