Asian Stock Gains Tempered by Falling Japanese Shares

Asia’s benchmark stocks gauge traded at an 18-month high as earnings from Commonwealth Bank of Australia and Leighton Holdings Ltd. boosted investor optimism. Japanese shares dropped as a stronger yen soured the earnings outlook for exporters.

Commonwealth Bank, the nation’s largest lender, climbed 2.4 percent as retail banking and wealth management boosted first-half profit by 1 percent. Leighton, Australia’s largest construction company, surged 11 percent after returning to full-year profit and reducing debt levels. Toyota Motor Corp. slid 1.8 percent in Tokyo as the yen gained against all 16 major peers. Gree Inc., a Japanese social-network game operator, plunged after cutting its profit forecast.

The MSCI Asia Pacific Index gained less than 0.1 percent to 133.49 as of 3:23 p.m in Tokyo. About the same number of shares rose and fell. Equity markets in Singapore and Malaysia reopened today after public holidays, while markets in China, Hong Kong, Taiwan and Vietnam remain shut.

“Things look pretty positive,” said Kirk Hartman, Los Angeles-based chief investment officer at Wells Capital Management, where he helps oversee about $331 billion. “I like Asia. Companies are beating earnings estimates. You have the U.S. economy kicking into gear and China also appears to be coming back,” he said in a Bloomberg Television interview.

Japan’s Nikkei 225 Stock Average lost 1 percent. Australia’s S&P/ASX 200 Index gained 0.9 percent, surpassing the 5,000 level and closing at the highest level since September 2008. Volume in Australia was about 22 percent higher than the 30-day average, data compiled by Bloomberg show. South Korea’s Kospi Index advanced 1.6 percent and Singapore’s Straits Times rose 0.9 percent.

Asian Earnings

Of the 299 companies on the MSCI Asia Pacific index that reported earnings this quarter and for which Bloomberg has estimates, 53 percent have exceeded profit expectations. Some 53 percent have missed sales projections. That compares with 74 percent of S&P 500 companies that topped profit forecasts during the period, while 34 percent fell short of sales estimates, data compiled by Bloomberg show.

CBA rose 2.4 percent to A$67.11. Leighton soared 11 percent to A$23.14. Gree slumped 15 percent to 1,150 yen in Tokyo after cutting its outlook on delays to new social-networking games.

Relative Value

The MSCI Asia Pacific Index, the benchmark regional equities gauge, traded at 14.9 times average estimated earnings compared with 13.7 for the S&P 500 and a multiple of 12.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The gauge climbed 0.2 percent yesterday to the highest level since November 2007 as earnings topped estimates. That left the gauge less than 3 percent below its record of 1,565.15 reached in October 2007, while the Dow Jones Industrial Average is about 1 percent from its all-time high of 14,164.53.

The S&P 500 has rallied 6.5 percent in 2013 as U.S. lawmakers reached a budget compromise and companies reported better-than-estimated profits. That’s more than double the MSCI Asia Pacific Index’s gain of 3.1 percent this year through yesterday.

Yen Strengthens

Toyota slid 1.8 percent to 4,830 yen. The yen rose against all 16 major peers after an official from the Group of Seven nations, who requested not to be further identified, said the group is concerned about excess moves in the yen and investors misinterpreted an earlier statement on exchange rates. The clarification came hours after the world’s major industrial economies appeared to signal acceptance of a weaker Japanese currency as long as Prime Minister Shinzo Abe’s government didn’t actively pursue devaluation.

Data tomorrow may show Japan’s economy emerged from its third recession in five years last quarter as cold weather boosted consumption, bolstering Abe’s campaign to revive growth. Gross domestic product probably expanded an annualized 0.4 percent the three months through December, according to the median forecast in a survey of 32 economists. Banks including JPMorgan Chase & Co. and Citigroup Inc. raised their forecasts from a contraction this month after a gauge of consumption rose.

The Bank of Japan will conclude a two-day policy meeting tomorrow.

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