Asian Stocks Advance as IMF Raises Forecast; TDK Jumps

Photographer: Kiyoshi Ota/Bloomberg

Pedestrians walk past an electronic stock board outside a securities firm in Tokyo, Japan. Close

Pedestrians walk past an electronic stock board outside a securities firm in Tokyo, Japan.

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Photographer: Kiyoshi Ota/Bloomberg

Pedestrians walk past an electronic stock board outside a securities firm in Tokyo, Japan.

Asian stocks rose for a second day as the International Monetary Fund raised its global growth forecast and as the Bank of Japan refrained from adding more stimulus to the world’s third largest economy.

Tokyo Steel Manufacturing Co. jumped 5 percent after returning to profit. TDK (6762) Corp. advanced 6.3 percent after Nomura Holdings Inc. raised its price target on shares of the electronic-component maker. MGM China Holdings Ltd. slumped 6.6 percent, leading declines among Macau casinos listed in Hong Kong, as JPMorgan Chase & Co. cut its rating on the stock.

The MSCI Asia Pacific Index added 0.3 percent to 139.96 as of 7:46 p.m. in Tokyo, reversing an earlier loss of 0.2 percent. The gauge is heading for its biggest monthly decline since August as investors weigh signs of a stronger global economy against concern about equity valuations.

“As investors are getting more convinced that the global recovery is strengthening, we could see equities rallying again,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors, which manages $131 billion, said by phone. “I don’t think the Japanese economy needs additional stimulus at this stage. BOJ already has a pretty aggressive monetary policy.”

Japan’s Topix (TPX) index added 0.3 percent. The BOJ said it will keep plans to increase the monetary base annually by 60 trillion to 70 trillion yen and maintained its inflation target for 2015.

China Rally

China’s Shanghai Composite Index rose 2.2 percent, the most since Nov. 18, as the nation’s money-market rates dropped for a second day after the central bank added more than $42 billion to the financial system and expanded a lending facility to smaller banks to meet Lunar New Year money demand.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies in Hong Kong advanced 1.1 percent, while the city’s benchmark Hang Seng Index gained 0.2 percent. New Zealand’s NZX 50 Index gained 0.6 percent. Taiwan’s Taiex index and South Korea’s Kospi index both added 0.3 percent.

Australia’s S&P/ASX 200 Index fell 0.2 percent. The nation’s consumer prices gained more than economists forecast last quarter, indicating the central bank may be reluctant to reduce interest rates further.

Thailand’s SET Index lost 0.3 percent. The nation’s central bank unexpectedly held its key interest rate, even as Prime Minister Yingluck Shinawatra yesterday declared a state of emergency in Bangkok to control anti-government protests that have crimped economic growth.

IMF Outlook

The global economy will expand 3.7 percent this year, compared with an October estimate of 3.6 percent, the IMF said in revisions to its World Economic Outlook released in Washington.

“Stronger economic growth will help boost earnings,” Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management, which oversees about $60 billion, said by phone. “The question is can companies deliver such growth. Valuations aren’t horribly expensive, but they’ve gotten a little bit pricey, so there’s a bit a hesitation among investors.”

Investors are the most upbeat about the global economy in almost five years, encouraged by the U.S.-led revival of industrialized economies, according to a Bloomberg Global Poll.

On the eve of the World Economic Forum’s annual meeting in Davos, Switzerland, 59 percent of Bloomberg subscribers surveyed last week said the economic outlook is improving. That’s up from 33 percent in November and marks the most optimistic result since the poll began in July 2009. Of the Bloomberg subscribers surveyed, 72 percent said the U.S. economy is improving, up from 53 percent a year ago.

Valuations

The Asia-Pacific benchmark gauge trades at 13.2 times estimated earnings yesterday, compared with 15.6 for the Standard & Poor’s 500 Index and 14.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent today after the equity gauge added 0.3 percent yesterday. The Dow Jones Industrial Average lost 0.3 percent yesterday as optimism about global economic growth was overshadowed by disappointing results from Johnson & Johnson and Verizon Communications Inc.

Tokyo Steel (5423) jumped 5 percent to 592 yen in Tokyo. The company reported a net profit of 1.4 billion yen ($13.4 million) in the nine months ended Dec. 31, compared with a loss of 13.3 billion yen in the same period the previous year.

TDK advanced 6.3 percent to 5,250 yen after Nomura raised its price target on the stock to 6,300 yen from 4,900 yen and maintained a buy rating.

Hite Jinro

Hite Jinro Co., a South Korean liquor maker, soared 6.7 percent to 22,300 won, the most on the MSCI Asia Pacific Index, after Yonhap News agency reported the company is planning to set up an alliance with global breweries. Anheuser-Busch InBev NV, the world’s biggest beer maker, this week agreed to buy Hite Jinro’s rival Oriental Brewery Co.

Macau casino operators retreated after JPMorgan said there is an increased downside for the shares as investors already priced in “significant growth” assumption. MGM China, which the brokerage downgraded to neutral from overweight, sank 6.6 percent to HK$32.65. Galaxy Entertainment Group Ltd., the best performer on the Hang Seng Index in the past 12 months, dropped 5.5 percent to HK$76.95.

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

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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