Asian Stocks Head for Biggest Gain Since June on China

Asian Stocks Rise as Gain in U.S. Housing Data Boosts Confidence
Laborers work on new home construction in Dublin, California. Photographer: David Paul Morris/Bloomberg

Asian stocks rose, with the benchmark index headed toward its biggest gain in almost three weeks, amid speculation China will do more to boost growth and after U.S. housing starts jumped to the highest in four years.

The Hang Seng China Enterprises Index of mainland companies jumped 2.4 percent as the country’s swap market signaled a further reduction in the reserve ratio requirement for banks. BHP Billiton Ltd., Australia’s biggest oil producer, increased 3.1 percent as crude prices exceeded $90 a barrel for the first time since May. Man Wah Holdings Ltd., a sofa maker which gets more than half of its sales from the U.S., climbed 4.9 percent in Hong Kong.

The MSCI Asia Pacific Index gained 1.5 percent to 117.5 as of 6:44 p.m. in Tokyo, headed for its biggest advance since June 29. Almost three shares rose for every two that fell. The Asian gauge dropped 8.9 percent from this year’s high on Feb. 29 on reports the U.S. and Chinese economies were slowing.

“So far we haven’t seen clear signs that the Chinese economy is bottoming,” said Yoji Takeda, who oversees $1.1 billion at RBC Global Asset Management in Hong Kong. “The U.S. market has been firm and housing data was a bit stronger than expected. Maybe its shows a relatively stable growth environment in the U.S. Markets are relieved and maybe we’ll see short covers coming in.”

The Asian benchmark, which contains some companies from emerging markets, trades at 11.8 times estimated earnings on average, compared with 13.2 times for the Standard & Poor’s 500 Index and 10.9 times for the Stoxx Europe 600 Index.

Japan’s Nikkei 225 Stock Average advanced 0.8 percent. South Korea’s Kospi Index increased 1.6 percent, erasing yesterday’s loss.

China Spending

Australia’s S&P/ASX 200 Index climbed 2 percent to close at its highest in two months. Singapore’s Straits Times Index rose 0.4 percent, gaining for a fifth day.

Hong Kong’s Hang Seng Index gained 1.7 percent, while China’s Shanghai Composite Index advanced 0.7 percent. China has “relatively large” room to boost fiscal spending to support economic growth, Zhang Peng, a Beijing-based researcher with the Ministry of Finance, said yesterday in a telephone interview.

China’s Premier Wen Jiabao will probably decide to cut banks’ reserve requirements and encourage corporate lending as the cabinet meets to discuss efforts to revive economic growth, the swap market indicates.

The cost to lock in the three-month Shanghai interbank offered rate for a year tumbled 28 basis points this month to 3.16 percent, 63 basis points lower than the benchmark money-market rate and near a two-year low, according to data compiled by Bloomberg.

China Lenders

China Construction Bank Co., the country’s second-largest lender by market value, climbed 2.7 percent to HK$4.93, while Bank of Communications Co. Ltd., the fifth-largest, advanced 3.3 percent to HK$5.01.

Futures on the Standard & Poor’s 500 Index rose 0.3 percent today. The gauge advanced 0.7 percent in New York yesterday, when the Commerce Department reported housing starts jumped 6.9 percent last month to 760,000, the highest annual pace since October 2008.

Earnings have exceeded analyst estimates for 37 of the 51 companies listed on the S&P 500 that have reported results this month, according to data compiled by Bloomberg. Net income has slumped 5.5 percent in this group.

Man Wah rose 4.9 percent to HK$3 in Hong Kong. James Hardie Industries SE, a maker of building products that gets about two-thirds of its sales from the U.S., climbed 2.2 percent to A$8.38 in Sydney.

Oil for August delivery increased 65 cents, or 0.7 percent, to settle at $89.87 a barrel in New York yesterday. The price ranged from $88.59 to $90.04, the highest intraday level since May 30.

Energy Stocks

BHP climbed 3.1 percent to A$31.10 in Sydney. Cnooc Ltd., China’s largest offshore oil producer, rose 2.9 percent to HK$15.80 in Hong Kong.

Yaskawa Electric Corp., an industrial robots maker, surged 8.4 percent to 569 yen in Tokyo. The company raised its first-half net-income forecast 67 percent. The stock had the biggest gain on the MSCI Asia Pacific Index, while Samsung Electronics Co. was the largest contributor to the gauge’s advance.

Samsung Electronics, which makes Galaxy tablets, rose 3.6 percent to 1.195 million won in Seoul after Apple Inc. was ordered by a judge to publish a notice on its U.K. website and in British newspapers alerting people to a ruling that Samsung didn’t copy designs for the iPad.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE