Asian Stocks Rebound From Biggest Decline in Seven Months

Asian stocks rose, with a regional index of shares outside Japan rebounding from the biggest loss yesterday since August.

Li & Fung Ltd. surged 21 percent in Hong Kong after the world’s largest supplier of clothes and toys to retailers reported profit that beat analyst estimates and proposed to spin off its branding and licensing business. Gome Electrical Appliances Holding Ltd. gained 4.2 percent as earnings exceeded forecasts. Metcash Ltd. slumped 9.5 percent in Sydney after the consumer goods marketing firm missed profit projections and said it will cut its dividend.

The MSCI Asia Pacific excluding Japan Index advanced 0.9 percent to 452.86 as of 8:51 p.m. in Hong Kong, paring this week’s slide to 0.3 percent. The measure fell 1.7 percent yesterday, taking its loss this year to 3.4 percent, as data from exports to industrial output showed signs of a slowdown in China and Federal Reserve Chair Janet Yellen indicated U.S. interest rates could rise as soon as six months after the end of the central bank’s bond-buying program. HSBC Holdings Plc and Markit Economics’ gauge of Chinese manufacturing is due March 24.

“The markets have a lot to digest with an unofficial U.S. rate rise potentially mid-next year,” Tim Schroeders, a Melbourne-based money manager who helps oversee $1 billion in equities at Pengana Capital Ltd., said by phone. “You don’t want to stick your neck out too far. We’re not overly cautious, but respectful that the dynamics are changing. The focus is going to come back to China on Monday.”

Regional Gauges

Hong Kong’s Hang Seng Index climbed 1.2 percent and South Korea’s Kospi index gained 0.8 percent. Singapore’s Straits Times Index increased 0.5 percent, while China’s Shanghai Composite Index rallied 2.7 percent. Australia’s S&P/ASX 200 Index rose 0.8 percent, with gains limited by a 9.5 percent slide in Metcash to A$2.85. Taiwan’s Taiex index declined 0.2 percent and New Zealand’s NZX 50 Index slipped 0.7 percent. Japanese markets are closed for a holiday.

Hong Kong’s Hang Seng China Enterprises Index of mainland stocks traded in the city gained 2.4 percent, following yesterday’s 1.7 percent drop which brought losses from its Dec. 2 high past the 20 percent threshold that some investors consider a bear market. Declines came as the yuan sank to a one-year low amid deepening concern the world’s second-largest economy is slowing. The CSI 300 Index of China’s 300 largest firms rose 3.4 percent. The gauge slid to a five-year low yesterday as Goldman Sachs Group Inc. cut its growth outlook for China.

Chinese equity funds had a record outflow of $1.5 billion for the week ended March 19, of which $1.3 billion came from exchange-traded funds, according to Citigroup Inc., citing EPFR Global data.

China Manufacturing

The HSBC/Markit China manufacturing purchasing managers’ index will come in at 48.7 for this month, compared with 48.5 in February, according to analysts surveyed by Bloomberg. A reading below 50 signals a contraction.

The China Beige Book survey, published by New York-based CBB International, showed the nation’s economy slowed this quarter, with revenue growth in industries including retail and mining weakening. Loans through non-traditional channels became more expensive, it said.

Yellen this week said the quantitative-easing program to stimulate the U.S. economy would end this fall should the central bank continue to taper in measured steps. There will be “considerable time” between the end of the stimulus and the first rate increase, meaning “six months or that type of thing,” she said.

U.S. Futures

Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The equities gauge yesterday gained 0.6 percent, rallying from its first decline in three days following Yellen’s comments.

Quarterly Fed forecasts showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1 percent by the end of 2015 and 2.25 percent a year later. Money-market rates showed traders see a 62 percent chance of an rate increase by June 2015, from 57 percent two days ago.

The Conference Board’s gauge of the U.S. economic outlook for the next three to six months climbed 0.5 percent in February, the most since November, data yesterday showed.

The MSCI Asia Pacific excluding Japan Index traded at 11.9 times estimated profit, compared with 15.9 on the S&P 500 and 14.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Li & Fung

Li & Fung soared 21 percent to HK$12.48 after full-year net income rose 17 percent to $725 million in 2013, beating the $594.2 million average of 14 analysts’ estimates compiled by Bloomberg. If regulators approve the listing of the branding and licensing business, Chief Executive Officer Bruce Rockowitz will become the CEO of the spun-off Global Brands Group.

Gome rose 4.2 percent to HK$1.25. Full-year profit at China’s second-largest home appliance retailer was 892 million yuan ($143 million), topping the 800.9 million yuan average forecast in a Bloomberg survey of analysts.

PetroChina Co. gained 3.2 percent to HK$7.86 in Hong Kong. The country’s biggest oil and gas producer said it’s cutting spending, and net income for last year rose 12 percent to 129.6 billion yuan.

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