Asian Stocks Rise as U.S. Housing, Earnings Boost Confidence
April 20, 2011, 6:31 AM EDTBy Anna Kitanaka and Norie Kuboyama
April 20 (Bloomberg) -- Asian stocks rose, with the regional index set for its biggest advance in nearly a month, as U.S. housing starts gained and earnings beat estimates at companies including Johnson & Johnson, signaling the world’s biggest economy is recovering.
Advantest, Japan’s largest maker of chip-testing equipment, gained 3.4 percent after Intel Corp. forecast quarterly sales that may top estimates. BHP Billiton Ltd., the world’s biggest mining company, gained 1.2 percent in Sydney after metals and oil prices rose. Samsung Electronics Co. gained 4.7 percent in Seoul after it agreed to sell its computer hard-disk drive business. LG Chem Ltd., South Korea’s biggest chemicals maker, jumped 5.6 percent after posting a 27 percent gain in first- quarter profit.
The MSCI Asia Pacific Index advanced 1.8 percent to 136.69 at 6:26 p.m. in Tokyo, its biggest gain since March 22. About five shares gained for each that fell on the 1,023-member gauge. The measure fell 0.5 percent last week, reversing three weeks of gains.
“Demand in the U.S., while it may not have the strength it once did, is slowly heading toward a recovery,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees $84 billion. “Yesterday we saw that housing in the U.S. was good, which means that the U.S. economy is improving, and that’s being appreciated by the market today.”
Japan’s Nikkei 225 Stock Average advanced 1.8 percent. Australia’s S&P/ASX 200 Index climbed 1.4 percent and New Zealand’s NZX 50 Index increased 1 percent. South Korea’s Kospi index rose 2.2 percent, the biggest gain among benchmark indexes in the region.
Hong Kong’s Hang Seng Index rose 1.6 percent while China’s Shanghai Stock Exchange Composite Index climbed 0.3 percent.
U.S. Housing Starts
Futures on the Standard & Poor’s 500 Index rose 1.2 percent today, the biggest advance since March 21. In New York, the index advanced 0.6 percent yesterday after the Commerce Department said housing starts increased 7.2 percent in March from the previous month. Work began on 549,000 homes, exceeding the 520,000 median forecast of economists surveyed by Bloomberg News.
Johnson & Johnson, the world’s second-biggest seller of health products, forecast full-year earnings for 2011 will be $4.90 to $5 a share, more than a January forecast of $4.80 to $4.90, after quarterly profit beat estimates as the result of new drugs and a weaker dollar.
Intel Revenue Forecasts
Information technology shares rose 2 percent today, the most among the MSCI Asia Pacific index’s 10 industry groups.
In Tokyo, Advantest rose 3.4 percent to 1,452 yen. Tokyo Electron Ltd., Japan’s biggest producer of chipmaking equipment, jumped 4.1 percent to 4,475 yen. Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, advanced 2.5 percent to NT$69.8 in Taipei.
Intel, the world’s biggest chipmaker, said revenue will be $12.8 billion, plus or minus $500 million. That compares with $11.9 billion, the average of analysts’ projections compiled by Bloomberg.
“You’re seeing signs the U.S. and Europe are still on track for recovery,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “That’s helped to ease nerves.”
Raw material producers had the second-largest advance among the MSCI Asia Pacific index’s subgroups today.
Commodities Rise
BHP climbed 1.2 percent to A$47.23, the second-biggest boost to the MSCI index. Rio Tinto Group, the world’s second- largest mining company by sales, advanced 1.2 percent to A$83.12. Inpex Corp., Japan’s largest oil and gas explorer, jumped 3.1 percent to 601,000 yen. Cnooc Ltd. China’s largest offshore energy producer, gained 3 percent to HK$19.46.
Crude oil for June delivery gained 0.6 percent yesterday to $108.12 a barrel in New York after the U.S. housing starts data stoked speculation that fuel demand may increase. The London Metal Exchange Index of six metals including copper and aluminum increased 1 percent, the biggest gain in almost two weeks.
The MSCI Asia Pacific Index lost 2.5 percent this year through yesterday, compared with gains of 4.4 percent by the S&P 500 and a decline of 0.5 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.9 times estimated earnings on average, compared with 13.5 times for the S&P 500 and 11 times for the Stoxx 600.
Samsung Sells Unit
Among other stocks that rose, Samsung Electronics, the world’s largest maker of memory chips, advanced 4.7 percent to 916,000 won, the biggest support to the MSCI index. Seagate Technology Plc agreed to buy Samsung’s unprofitable hard-disk drive business for $1.38 billion, allowing Samsung to focus on its chip business, the company said.
LG Chem also rose in Seoul, jumping 5.6 percent to 549,000 won, its highest close on record. The company’s petrochemical business will sustain “high profitability” in the second quarter as plant maintenance by rivals will limit supply at a time when demand for chemicals is rising, Chief Executive Officer Kim Bahn Suk told investors yesterday. Net income rose to 656.6 billion won ($601 million) in the three months ended March 31 from 517.7 billion won a year earlier, the company said.
LG Corp., the holding company of South Korea’s LG Group including LG Chem, surged 10 percent to 96,600 won in Seoul, the biggest gain on the MSCI Asia Pacific Index, after Daishin Securities Co. said the shares are “excessively undervalued.” The shares are headed for their highest close since January 2000.
--With assistance from Satoshi Kawano in Tokyo. Editor: Brian Fowler, Nick Gentle.
To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
