Asian stocks rose for a second straight week, closing at the highest level since January, as U.S. and Chinese manufacturing beat estimates and a weaker yen boosted Japanese equities.
China Gas Holdings Ltd. jumped 9.1 percent in Hong Kong after Russia reached a $400 billion deal to supply gas to China. Honda Motor Co. (7267), which gets about half its sales from North America, surged 4.3 percent in Tokyo. Copper producer Sesa Sterlite Ltd. climbed to its highest level in almost three years as Indian stocks soared after the election of Narendra Modi. Stocks fell in Thailand as the army staged a coup.
The MSCI Asia Pacific Index rose 0.9 percent this week to 140.92, bringing its two-week gain to 2.2 percent. A China purchasing managers’ index of manufacturing by HSBC Holdings Plc and Markit Economics delivered a provisional reading of 49.7 for May, rising from 48.1 in April and beating estimates. A similar index of U.S. manufacturing also topped forecasts.
“Market sentiment stabilized, but we need more solid macro indicators that the global economy is still in a sustainable force,” said Linus Yip, a strategist at First Shanghai Securities Ltd. in Hong Kong. “China’s PMI was a good signal, but we still have to see if the growth rate is stabilizing. Investors are confident there will be some policy coming out from central banks to help the market.”
Asian stock gains this week also were spurred by minutes that showed Federal Reserve policy makers see a muted risk of inflation from continued U.S. stimulus. The Fed reiterated that it will keep its key interest rate target near zero for a “considerable time” once it concludes its bond-buying program.
Japan’s Topix index jumped 1.8 percent this week, snapping two weeks of losses, and the Nikkei 225 Stock Average rose 2.6 percent as the yen fell for the first week in three. Toyota Motor Corp. (7203), which gets 31 percent of its revenue in North America, added 0.6 percent to 5,557 yen and Honda surged 4.3 percent to 3,502 yen. The Bank of Japan refrained from adding to monetary stimulus this week, as expected by economists.
The Asia-Pacific gauge traded at 12.9 times estimated earnings yesterday compared with 16.1 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.
South Korea’s Kospi index jumped 0.2 percent this week to its highest close since December. Singapore’s Straits Times Index added 0.5 percent as a report showed the city’s gross domestic product expanded an annualized 2.3 percent in the three months through March from the previous quarter, when the economy grew a revised 6.9 percent.
Australia, Hong Kong
Australia’s S&P/ASX 200 Index advanced 0.3 percent, while New Zealand’s NZX 50 Index dropped 0.7 percent.
Hong Kong’s Hang Seng Index climbed for a second week, adding 1.1 percent, and the Hang Seng China Enterprises Index (HSCEI) of mainland stocks traded in the city rose 1.7 percent. China Gas advanced 9.1 percent to HK$12.90 and China Resources Gas Group Ltd. jumped 8.3 percent to HK$24.90 after Bank of America Corp. and Credit Suisse Group AG. said the companies will benefit from the deal Russia signed to supply natural gas to China.
The Shanghai Composite Index (SHCOMP) added 0.4 percent this week to close at 2,034.57. The gauge breached the 2,000 threshold earlier in the week, a level analysts have cited as a trigger for state-linked funds to enter the market and the state to announce measures to support growth.
India’s S&P BSE Sensex Index (SENSEX) soared 2.4 percent to a record before the country’s new prime minister announces his cabinet next week. India’s strongest electoral mandate in 30 years has put prime minister-in-waiting Modi in a position to pass measures to bolster Asia’s third-biggest economy, spurring optimism it will lead a recovery among the biggest emerging markets.
Sesa Sterlite climbed 25 percent to its highest level since August 2011, the best performer on the Sensex this week.
Thailand’s SET Index (SET) lost 0.6 percent after the nation’s army staged its 12th coup in eight decades as the army chief, Prayuth Chan-Ocha, said he was seizing control to restore peace. Schools were shut, international television stations were off air and channels broadcast military logos and patriotic music after the military seized control following a six-month political stalemate that has sapped economic growth.
Treasury Wine Estates Ltd. (TWE), the world’s second-largest listed wine company and maker of Penfolds Grange, soared 27 percent in Sydney this week on speculation it will attract higher offers than a spurned A$3.05 billion ($2.8 billion) takeover bid from KKR & Co. The company remains open to further engagement from the buyout firm or other investors, said Chief Executive Officer Mike Clarke.
Chinese developers sank earlier in the week after data showed a spreading slowdown in the nation’s housing market. They recovered to end the week higher after the China Securities Journal reported the nation will remove home-purchase restrictions depending on market situations.
China Overseas Land & Investment Ltd. (688), the largest mainland developer listed in Hong Kong, finished the week 4 percent higher, while China Resources Land Ltd. added 0.3 percent. China’s government has allowed cities to independently adjust homebuying curbs except for Beijing, Shanghai, Guangzhou and Shenzhen, according to the Southern Weekly.
Sanrio Co., maker and licenser of Hello Kitty goods, plunged 18 percent in Tokyo to be the worst performer this week on the MSCI Asia Pacific Index. Analysts including Sho Kawano at Goldman Sachs Group Inc. cut targets for the company, citing a waning outlook for U.S. sales.
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