Asia Stocks Outside Japan Little Changed at ’08 High on Earnings

Asian shares outside Japan were little changed at a seven-year high, amid corporate earnings and as energy shares led losses. Fanuc Corp. surged in Tokyo.

PetroChina Co., China’s largest oil and gas producer, sank 4.7 percent in Hong Kong after posting record-low profit. Jiangxi Copper Co., China’s biggest producer of the metal, fell 2.1 percent after reporting a 61 percent slump in first-quarter net income. Tokyo Electron Ltd. plunged 15 percent after Applied Materials Inc. scrapped a $9.39 billion takeover bid for the manufacturer of chipmaking equipment. Fanuc jumped 3.3 percent after the robot maker doubled its dividend payout ratio.

The MSCI Asia Pacific excluding Japan Index added less than 0.1 percent to 524.2 as of 2:17 p.m. in London,the highest since January 2008. The broader gauge including Japan climbed 0.3 percent. Almost 300 companies on the equity benchmark gauge report earnings this week, with 45 percent of those that have reported so far exceeding analysts’ profit estimates, according to data compiled by Bloomberg.

“Valuations have a run a little bit ahead of earnings,” Angus Gluskie, managing director at White Funds Management in Sydney, where he oversees about $550 million, said by phone. “We need to see a period when earnings catch up and progressively make the valuations look more favorable. We’re sitting on the fence and it seems the Fed is finely balanced.”

Shares on the MSCI Asia Pacific Index traded at 14.9 times estimated earnings on Monday, the highest in a month, according to data compiled by Bloomberg. That compares with a multiple of 17.9 for the Standard & Poor’s 500 Index.

Fed Meeting

Federal Reserve officials start a two-day meeting on Tuesday, with none of the 43 economists surveyed in a Bloomberg poll expecting the U.S. central bank to raise benchmark borrowing costs this week. Fed Chair Janet Yellen and her colleagues last month opened the door to tightening rates as soon as June, while also suggesting in forecasts that September may be more likely.

“Any improvement in U.S. data releases, suggesting better economic performance in the US, could push forward the time frame when markets expect rates to rise,” Herald Van Der Linde, Hong Kong-based head of Asia-Pacific equity strategy at HSBC Holdings Plc, wrote in a note to clients today. “That would negatively impact Asian equities.”

China’s Shanghai Composite Index dropped 1.1 percent amid concern slowing economic growth and weak commodities demand are hurting earnings. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong fell 0.2 percent, while the benchmark Hang Seng Index closed little changed.

South Korea’s Kospi index lost 0.5 percent, while Taiwan’s Taiex index slipped 0.2 percent. Australia’s S&P/ASX 200 Index and Singapore’s Straits Times Index each fell 0.6 percent. The Jakarta Composite Index was little changed, as was New Zealand’s NZX 50 Index, which reopened following a holiday.

Japan Optimism

Japan’s Topix index climbed 0.5 percent, extending a seven-year high. The benchmark Nikkei 225 Stock Average gained 0.4 percent, the first advance in three days, with Fanuc providing the biggest boost after saying it will raise returns to investors.

“Fanuc is clearly the focus,” said David Welch, head of equity sales trading at Reorient Group in Hong Kong. “Some investors are saying if Fanuc can change, there is optimism that other companies will follow suit, as Fanuc used to be one of the least shareholder-friendly companies in Japan.”

The S&P 500 Index slid 0.4 percent on Monday as declines in biotechnology companies overshadowed a rally in commodities stocks. E-mini futures on the gauge slipped 0.1 percent today. Apple Inc. rose in premarket trading after posting profit that beat analyst estimates and boosting its dividend.

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