Asia Stocks Head for Six-Year High on Tankan Survey

Asian stocks rose, with the regional index headed for a six-year high, driven by a rally in Japanese stocks as investors weighed a survey of business sentiment.

GS Engineering & Construction Corp. jumped 7 percent in Seoul, leading gains in industrial shares. Epistar Corp., a Taiwanese maker of computer chips, soared 4.9 percent as it plans to acquire Formosa Epitaxy Inc. Square Enix Holdings Co., a video-game maker, jumped 6.5 percent in Tokyo as it seeks partners in China.

The MSCI Asia Pacific Index (MXAP) gained 0.3 percent to 146.22 as of 2:21 p.m. in Hong Kong, heading for the highest close since June 9, 2008, as nine of its 10 industry groups rose. The gauge climbed 5.6 percent in the quarter ended yesterday. Japan’s Topix (TPX) index added 1.1 percent today as the central bank’s Tankan survey showed companies raised their investment plans more than forecast even as a sales-tax increase dented sentiment.

“There are still some positive numbers we can look at in the Tankan,” Takuji Okubo, chief economist at Japan Macro Advisors, told Bloomberg TV from Tokyo. “They have revised up capital expenditure growth. Japanese companies are enjoying profit growth, they are flush with money and they are deploying and spending that.”

South Korea’s Kospi index lost 0.2 percent. Australia’s S&P/ASX 200 Index fell 0.4 percent as the Reserve Bank of Australia kept its key interest rate at a record low today. New Zealand’s NZX 50 Index climbed 0.1 percent.

Democracy March

Taiwan’s Taiex index rose 0.5 percent, while Singapore’s Straits Times Index slid 0.5 percent. The Shanghai Composite Index was little changed. India’s S&P BSE Sensex Index added 0.4 percent.

Markets in Hong Kong and Thailand are closed for holidays. Tens of thousands are set to march in Hong Kong today to demand full democracy on the anniversary of its return to Chinese rule.

Large Japanese companies across all industries plan to increase capital spending by 7.4 percent this fiscal year through March, more than a 0.1 percent gain they signaled three months earlier, the Bank of Japan report showed today. That beat a median 6 percent boost forecast in a survey of economists by Bloomberg News. A gauge of sentiment among large manufacturers fell to a reading of 12 from 17 in March.

“I don’t think the Tankan will disappoint the market much because investors believe Japan will be fine with the tax-increase impact unless something goes wrong overseas,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 13.4 trillion yen ($132 billion) in assets. “We don’t need to worry much because the U.S. and China are doing OK.”

China Manufacturing

China’s manufacturing expanded in June at the fastest pace this year. The Purchasing Managers’ Index was at 51, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today, matching the median estimate of analysts surveyed by Bloomberg News. May’s reading was 50.8, with numbers above 50 signaling expansion.

The final reading of a purchasing managers’ index from HSBC Holdings Plc and Markit Economics rose to 50.7 in June from 49.4 in May.

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The stock measure was little changed yesterday, capping the longest string of quarterly gains since 1998, as a jump in pending home sales offset weaker-than-forecast manufacturing data.

Home Sales

The number of contracts to purchase previously owned U.S. homes jumped 6.1 percent in May, the most in more than four years. The Institute for Supply Management-Chicago Inc.’s business barometer fell to 62.6 in June from 65.5 in May. The median forecast of economists in a Bloomberg survey projected the index would drop to 63.

The Institute for Supply Management’s U.S. manufacturing index today will probably rise to 55.9 for June from 55.4 in May, according to economists surveyed by Bloomberg.

Industrial shares gained the most among the 10 industry groups on the MSCI Asia Pacific measure. GS Engineering & Construction, a contractor, jumped 7 percent to 36,050 won in Seoul. Daikin Industries Ltd., a Japanese maker of air conditioners, soared 4.5 percent to 6,680 yen.

Epistar gained 4.9 percent to NT$77.60 and Formosa Epitaxy soared 6.9 percent to NT$19.50 in Taipei. Formosa Epitaxy, a maker of wafers and chips, will become Epistar’s wholly owned subsidiary after the completion of a share swap, tentatively scheduled for Dec. 30.

Square Enix, maker of the Final Fantasy and Dragon Quest video-game series, jumped 6.5 percent to 1,910 yen. It aims to boost sales from Asia outside its home market of Japan to as much as 40 percent of its total within “several years,” President Yosuke Matsuda said in an interview yesterday.

The Asia-Pacific gauge traded at 13.4 times estimated earnings as of yesterday compared with 16.6 for the S&P 500 and 15.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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