Asian Stocks Gain as Elpida, Apple Fuel Confidence in Recovery

Elpida Memory Inc's DDR2 Mobile Randam Access Memory
Elpida Memory Inc's DDR2 Mobile Randam Access Memory (RAM) devices are arranged for a photograph in Tokyo, Nov. 4, 2009. Photographer: Tomohiro Ohsumi/Bloomberg

Asian stocks rose, driving the MSCI Asia Pacific Index up by the most in five weeks, as better-than-estimated results from Elpida Memory Inc. and Apple Inc. boosted confidence in the global economic recovery.

Elpida jumped 4 percent in Tokyo after its first annual profit in three years beat analyst expectations. LG Chem Ltd., South Korea’s biggest maker of chemicals, advanced 5.5 percent in Seoul after first-quarter earnings surged. Woodside Petroleum Ltd. rose 1.2 percent in Sydney on higher oil prices. Honda Motor Co., which gets 44 percent of its sales in North America, gained 1.4 percent in Tokyo after the yen weakened.

“The earnings that have so far been released have, as a whole, been way ahead of expectations,” said Paul Xiradis, who manages more than $10 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney. “The recovery has really taken hold now and will continue to roll out, despite some of the concerns around sovereign risk.”

The MSCI Asia Pacific Index climbed 1 percent to 127.23 as of 7:35 p.m. in Tokyo, the biggest advance since March 17. The gauge has gained 5.6 percent this year, as better-than-estimated company earnings and economic data overshadowed concerns that Greece’s struggle to curb its budget deficit and credit tightening in China will derail growth.

Technology companies led South Korea’s Kospi Index up by 1.7 percent and Taiwan’s Taiex Index by 1.1 percent. Japan’s Nikkei 225 Stock Average jumped 1.7 percent. China’s Shanghai Composite Index advanced 1.8 percent.

Goldman Sachs Earnings

Hong Kong’s Hang Seng Index declined 0.5 percent, led by real-estate developers after the government said it may raise sales taxes and accelerate land auctions to prevent a bubble in the city’s property market.

Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge rose 0.8 percent yesterday amid better-than-estimated results. Goldman Sachs Group Inc., which is facing a fraud suit by the Securities and Exchange Commission, said its net income almost doubled in the first quarter.

The MSCI World Index slumped 1.6 percent on April 16, the most since Feb. 4, after the SEC’s suit against Goldman Sachs raised concerns that regulatory scrutiny of banks will increase.

After U.S. markets closed yesterday, Apple said second-quarter profit almost doubled to $3.07 billion, and sales gained 49 percent to $13.5 billion, topping the $12 billion average of analysts’ estimates compiled by Bloomberg.

Taiwan’s Wintek Corp., a maker of glass overlays that detect fingertip touches on Apple’s iPads, rose 0.2 percent to NT$27.70 in Taipei. Hon Hai Precision Industry Co., which makes Apple’s iPhones, gained 0.4 percent to NT$139.

Apple’s iPhone

In Seoul, Samsung Electronics Co., Asia’s biggest maker of chips, flat screens and mobile phones, increased 2.9 percent to 852,000 won. Hynix Semiconductor Inc., the world’s second-largest computer-memory chipmaker, rose 5.7 percent to 28,550 won. Apple said iPhone shipments doubled in the second quarter to 8.75 million. The company also sold 2.94 million Macintosh computers.

Elpida, Japan’s biggest maker of computer memory, climbed 4 percent to 2,091 yen in Tokyo after reporting net income for the year ended March 31 of 2 billion yen ($21.5 million). The average of 16 analyst estimates compiled by Bloomberg was for a 5.68 billion yen net loss.

Japanese chip stocks also gained after Citigroup Inc. raised its rating on the industrial electronics and semiconductors sectors to “moderately bullish” from “neutral.” Advantest Corp., the world’s largest maker of memory-chip testers, gained 3.3 percent to 2,432 yen. Toshiba Corp. jumped 2.9 percent to 527 yen.

Higher Valuations

The MSCI Asia Pacific Index has climbed 11 percent from its low this year on Feb. 8 amid better-than-expected earnings or forecasts and signs of economic growth in the region and the U.S. Shares on the measure trade at an average of 1.65 times book value, compared with about 1.5 times at the February low, according to Bloomberg data.

In Seoul, LG Chem jumped 5.5 percent to 258,500 won after reporting a 73 percent increase in first-quarter profit. The average estimate for earnings at companies in the MSCI Asia Pacific Index has risen by 14 percent in the past four weeks, according to data compiled by Bloomberg.

Japanese exporters gained as the yen weakened to as much as 93.39 to the dollar today after trading at 92.60 at the close of Tokyo stock trading yesterday. A weaker yen boosts companies’ revenue from overseas sales when converted into the local currency.

Yen Weakness

Honda gained 1.4 percent to 3,240 yen. Sharp Corp., Japan’s largest maker of liquid-crystal displays, rose 2.2 percent to 1,229 yen. Panasonic Corp., which gets 25 percent of its revenue from the Americas and Europe, climbed 1.9 percent to 1,383 yen.

“The results from the U.S. show Americans are buying, and that’s boosting expectations for demand,” said Naoki Fujiwara, a fund manager at Shinkin Asset Management Co. in Tokyo, which oversees the equivalent of $3.8 billion. “The weaker yen is also contributing a lot to today’s gains.”

China’s stocks rose for the first time in five days, as health-care and consumer companies gained on the prospect they will benefit from uncertainties over the government’s monetary tightening policies. The Shanghai Composite Index lost 5.9 percent in the previous four days as the government stepped up measures to curb property prices.

Guangzhou Pharmaceutical Co. climbed 4.5 percent to 13.75 yuan. Dashang Group Co., a retailer based in the northeastern city of Dalian, surged 10 percent to 48.99 yuan.

Prime View

“Small- and medium-cap stocks like drugmakers and retailers are the best place to shield from policy risks,” said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co. “The impact of the crackdown on the property market won’t be catastrophic because the government may ease off if there’s a big decline in property prices.”

In Taipei, Prime View International Co., which supplies technology used in Inc.’s Kindle and Sony Corp.’s Reader, surged 6.9 percent to NT$61.60. The gain was the second-biggest in the MSCI Asia Pacific Index after JPMorgan Chase & Co. recommended the shares.

Thai Airways International Pcl, the nation’s largest carrier, advanced 1 percent to 25.25 baht in Bangkok after resuming some flights to Europe following a shutdown caused by a cloud of volcanic ash from Iceland last week.

Air China Ltd. gained 4.2 percent to 14.07 yuan in Shanghai after news Web site Civil Aviation Resources Net of China reported the nation’s airlines posted combined March profit of 2.72 billion yuan ($398 million).

Hong Kong Developers

Cathay Pacific Airways Ltd., Hong Kong’s biggest carrier, rose 4.3 percent to HK$16.56. All Nippon Airways Co. advanced 3.8 percent to 302 yen, the highest close since July 6, after Bank of America Corp.’s Merrill Lynch & Co. boosted its rating on the shares to “buy” from “underperform.”

Hong Kong property developers fell after Financial Secretary John Tsang told lawmakers today that the government is “deeply concerned” about rising property prices. The city may raise the stamp duty on homes sold for less than HK$20 million ($2.58 million), he said.

Sun Hung Kai Properties Ltd., the world’s biggest developer by market valued, slipped 1 percent to HK$115.20. Henderson Land Development Co., the developer controlled by billionaire Lee Shau-kee, fell 0.8 percent to HK$51.35.

“The government may impose more measures to prevent a bubble in the property market,” said Castor Pang, Cinda International Ltd’s research director in Hong Kong. “Property stocks may face further selling pressure.”

China Mobile Ltd., the world’s biggest phone carrier by market value, sank 1.6 percent to HK$78.95 after the company’s first-quarter profit missed analyst estimates.

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