Asian Stocks Post First Monthly Advance Since October

Asian stocks posted a third week of gains, completing the first monthly advance since October, as company profit forecasts and takeover speculation overshadowed concern that the Chinese economy will slow.

Ramsay Health Care Ltd. (RHC) surged 8.8 percent this week in Sydney after raising its profit forecast. Naver Corp. soared 16 percent in Seoul as people with knowledge of the matter said a stake in the company’s Line Corp. mobile-messaging service is being sought by SoftBank Corp. China’s Shanghai Composite Index (SHCOMP) lost 2.7 percent this week, the biggest weekly decline since the period ending Jan. 10, amid concern growth will wane as banks curb lending to the real-estate market while a weaker yuan spurs capital outflows.

The MSCI Asia Pacific Index gained 0.3 percent this week to 137.84. Chinese shares were dragged lower ahead of the National People’s Congress meetings and a report today that may show a gauge of manufacturing declined to a 17-month low.

“You’re going to see China growing much more slowly than people think,” Bill Priest, who oversees $38 billion as chief executive officer of Epoch Holding Corp., said in Sydney. “You’re still going to have capital flight in many of these emerging markets. I’m not convinced that is over yet.”

The yuan plunged as much as 0.85 percent to a 10-month low of 6.1808 per dollar yesterday in Shanghai, the biggest intraday loss in China Foreign Exchange Trade System prices going back to 2007. The drop was the biggest since China unified official and market exchange rates at the start of 1994, according to data compiled by Bloomberg.

Sudden Drop

Goldman Sachs Group Inc. said a combination of macroeconomic and currency reform objectives are behind the yuan’s sudden weakening, according to a report published Feb. 27 by analysts including Kamakshya Trivedi. There are growing concerns over the growth impact of a credit buildup in the last few years, the report said. Policy makers also want to discourage leveraged bets on yuan appreciation, especially by local companies, it said.

Hong Kong’s Hang Seng Index gained 1.2 percent this week while the Hang Seng China Enterprises Index slid 0.5 percent. Singapore’s Straits Times Index lost 0.4 percent and New Zealand’s NZX 50 Index advanced 1.3 percent.

Japan’s Topix index this week declined 0.9 percent.

Australia Declines

Australia’s S&P/ASX 200 Index (AS51) retreated 0.6 percent this week as Qantas Airways Ltd. dropped and a report showed business investment fell the most since 2009.

Capital spending in Australia slumped 5.2 percent in the three months ended December from the previous period, when it climbed 3.6 percent, the statistics bureau said Feb. 27. That compares with the median estimate for a 1.3 percent slide by economists surveyed by Bloomberg News before the report.

Qantas will defer delivery of three Boeing Co. 787-8 Dreamliners and eight Airbus Group NV A380s, freeze all group pay until the company returns to profit and cut more than one in seven of its full-time equivalent jobs by 2017, the company said this week as it posted a A$252 million loss. Chief Executive Officer Alan Joyce argues the 93-year-old airline can’t compete in a domestic price war with Virgin Australia Holdings Ltd., whose three biggest shareholders are state-controlled foreign airlines.

The MSCI Asia Pacific Index climbed 5.9 percent from this year’s low on Feb. 4, leaving the gauge trading at 13 times the estimated earnings of its constituent companies, compared with 15.7 for the Standard & Poor’s 500 Index and 14.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Earnings Season

Of the 420 companies on the Asia-Pacific measure that have reported quarterly earnings since the start of the year and for which Bloomberg compiles estimates, 53 percent topped profit forecasts.

Ramsay Health jumped 8.8 percent to A$48.25 this week after raising its earnings forecast for 2014. QBE Insurance Group Ltd. climbed 10 percent to A$12.82 as the insurer said it plans to increase premium rates and bring its North American unit back to profit this year.

Naver climbed 16 percent to 817,000 won. Naver’s Line has received offers for all or some of the company, prompting it to slow preparations for an initial public offering, said two people who asked not to be identified as the information is private. The Tokyo-based firm, which has about 340 million users, may be worth as much as $14.9 billion, according to BNP Paribas SA.

Among stocks that fell, HSBC Holdings Plc (5) lost 2.5 percent in Hong Kong after profit at Europe’s largest bank missed estimates as a cost-cutting drive fell short of targets and revenue shrank.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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