Bloomberg News

Asian Stocks Advance, Led by Technology Companies; Tepco Drops

June 01, 2011

June 1 (Bloomberg) -- Asian stocks rose, driving the regional benchmark index to its highest level in three weeks, as rivals of Nokia Oyj gained after the mobile-phone maker lowered its sales and profit forecasts.

HTC Corp., a Taiwanese maker of smartphones using Google Inc.’s Android and Microsoft operating systems, advanced 2.1 percent in Taipei. LG Electronics Inc., the world’s third- largest mobile phone maker, gained 1.3 percent in Seoul. Tokyo Electric Power Co., owner of the Fukushima Dai-Ichi plant at the center of the worst nuclear accident in 25 years, slumped 5.7 percent in Tokyo after Bank of America’s Merrill Lynch unit said the utility’s future as a listed company is uncertain.

“Nokia’s cut of its forecast does help the shares of its more aggressive competitors,” Sam Hsieh, a Taipei-based fund manager at Fuh Hwa Investment Trust Co., who helps oversee the equivalent of $7.8 billion. “But Nokia has been weak for a long time, so investors have mostly priced that in. Any impact would be short-term.”

The MSCI Asia Pacific Index gained 0.2 percent to 136.62 as of 7:14 p.m. in Tokyo, heading for its highest close since May 11. About the same number of stocks rose and fell on the 1,016- company gauge, which last week completed its longest streak of weekly losses in two years as concern deepened over Europe’s debt crisis and amid speculation a slowing global recovery will crimp earnings.

Australian, Chinese Data

Australia’s S&P/ASX 200 Index was little changed after a report showed the country’s economy shrank in the first quarter by the most in 20 years after flooded coal mines, railways and farmland hurt exports. Japan’s Nikkei 225 Stock Average increased 0.3 percent. Taiwan’s Taiex Index climbed 0.8 percent.

Hong Kong’s Hang Seng Index dropped 0.2 percent. China’s Shanghai Composite Index was little changed, erasing losses of as much as 0.6 percent, after a report showed the nation’s manufacturing expanded in May at the slowest pace in nine months as the government extended a campaign to cool inflation and the property market.

Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. In New York, the index advanced 1.1 percent yesterday after Jean-Claude Juncker, head of the group of euro-area finance ministers, said European Union leaders will decide on additional aid for Greece by the end of June and have ruled out a “total restructuring” of the country’s debt.

Consumer Confidence

Stocks in the U.S. gained even after the Institute for Supply Management-Chicago Inc. said its business barometer fell more than expected. Consumer sentiment unexpectedly decreased in May to the lowest level in six months as Americans grew concerned over the outlook for jobs and the economy, while a measure of home prices dropped to a nine-year low.

“There’s still some uncertainty about the outlook for the U.S. economy,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.

The MSCI Asia Pacific Index lost 1 percent this year through yesterday, compared with gains of 7 percent by the S&P 500 and 1.8 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.6 times estimated earnings on average, compared with 13.6 times for the S&P 500 and 11.2 times for the Stoxx 600.

A gauge of information technology companies posted the biggest advance among the 10 industry groups in the MSCI Asia Pacific Index. All but two of the sub-indexes advanced.

Nokia Rivals

Nokia’s rivals rallied after the manufacturer said mobile phone sales will “substantially” fall short of its projected range this quarter as it lost market share to Apple Inc.’s iPhone and Google’s Android, the fastest-growing smartphone platform.

HTC increased 2.1 percent to NT$1,245 in Taipei. Hon Hai Precision Industry Co., which manufactures iPhones and iPads, gained 1.5 percent to NT$102. LG Electronics increased 1.3 percent to 98,500 won in Seoul. Samsung Electronics Co., the world’s second-biggest maker of mobile phones by sales, added 1 percent to 911,000 won.

RHB Capital Bhd., Malaysia’s fifth-biggest bank by assets, jumped 7.4 percent to 9.90 ringgit in Kuala Lumpur, its biggest advance since November 2008. CIMB Group Holdings Bhd. and Malayan Banking Bhd. won Malaysian central bank approval to begin separate merger talks with RHB Capital, triggering a takeover battle that may create Southeast Asia’s biggest bank.

Tepco Plunges

International Container Terminal Services Inc., the largest Philippine port operator, increased 4.5 percent to 52.35 pesos. The company offered to buy the rest of Singapore-based rival Portek International Ltd. for S$171 million ($139 million) to add terminals in Asia, Africa and Europe.

Among stocks that dropped, Tokyo Electric Power, or Tepco as Japan’s largest electric utility by sales is known, slumped 5.7 percent to 299 yen in Tokyo. The shares have fallen about 86 percent since the March 11 earthquake crippled the Fukushima Dai-Ichi nuclear plant.

“For now, the company and the government plan to maintain the utility’s listing,” Merrill Lynch said in a Japanese- language report dated yesterday. “Depending on the future direction of politics, that may change.”

Chubu Electric Power Co., Japan’s third-biggest utility by sales, lost 2.2 percent to 1,254 yen after Merrill Lynch cut its rating on the stock to “neutral” from “buy.” Smaller rivals Hokuriku Electric Power Co. and Hokkaido Electric Power Co. both declined more than 2 percent after the brokerage lowered its recommendation on the stocks to “underperform” from “neutral.”

--With assistance from Norie Kuboyama in Tokyo. Editor: Nick Gentle, Jason Clenfield.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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