Bloomberg News

Asian Stocks Rise as U.S. Retail Sales, Japan GDP Boost Outlook

August 15, 2011

Aug. 15 (Bloomberg) -- Asian stocks rose following the longest series of weekly losses since June after U.S. retail sales increased by the most in four months and Japan’s second- quarter gross domestic product beat economist estimates.

Toyota Motor Corp., the largest carmaker by market value, climbed 2.9 percent in Tokyo. BHP Billiton Ltd., the world’s biggest mining company, gained 4.3 percent in Sydney amid optimism metals demand will pick up. Leighton Holdings Ltd., Australia’s biggest builder, surged 8.3 percent after saying it expects to return to annual profit. PICC Property & Casualty Co. jumped 10 percent in Hong Kong after first-half earnings almost doubled from a year earlier.

“Investors may be heartened that things don’t seem quite as disastrous as they seemed,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “Still, markets have got to come to terms with the fact that global growth isn’t going to be nearly as robust as they once expected.”

The MSCI Asia Pacific Index rose 1.9 percent to 124.19 as of 5:20 p.m. in Tokyo. Eight stocks advanced for each one that declined, and nine out of 10 industry groups tracked by the index climbed. The gauge completed its third straight weekly loss last week after Standard & Poor’s cut its rating on U.S. credit and concern grew that Europe’s debt crisis may spread. Ten-day historical volatility on the MSCI index climbed last week to the highest level since March.

Japanese Growth

Japan’s Nikkei 225 Stock Average climbed 1.4 percent after the Cabinet office reported gross domestic product shrank at an annualized 1.3 percent rate in the three months ended June 30. The median forecast of 25 economists surveyed by Bloomberg News was for a 2.5 percent drop.

Hong Kong’s Hang Seng Index rose 3.3 percent, while Australia’s S&P/ASX 200 Index gained 2.6 percent. The Taiex Index added 2.4 percent in Taipei. Markets in India and South Korea are shut for a public holiday.

Futures on the U.S. S&P 500 Index advanced 0.6 percent. The gauge rose 0.5 percent on Aug. 12, capping the biggest two-day advance for benchmark indexes since March 2009, after the Commerce Department reported a 0.5 percent increase in retail sales for July. First-time applications for jobless benefits decreased in the week ended Aug. 6 to the fewest since early April, the Labor Department said Aug. 11.

“People had been worried about the U.S. economy over the medium term, but after retail sales and an earlier jobs report exceeded estimates, people’s fears weren’t amplified,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo. “There will be some buying in exporters and large-cap stocks.”

Toyota, BHP

Toyota advanced 2.9 percent to 2,901 yen in Tokyo. In Hong Kong, Li & Fung Ltd., which supplies clothes and toys to retailers including Wal-Mart Stores Inc. and gets 65 percent of its revenue in the U.S., increased 7.6 percent to HK$13.82.

BHP Billiton rose 4.3 percent to A$39.85 in Sydney as copper futures in New York gained as much as 1.1 percent today. Rio Tinto Group, the world’s second-biggest mining company by sales, climbed 4.2 percent to A$74.52.

The MSCI Asia Pacific Index has tumbled 11 percent since July 26 amid a global selloff that erased almost $7 trillion from world markets and prompted South Korea, France, Spain, Italy and Belgium to ban short selling. Short-sellers sell borrowed shares with plans to buy them back later at a lower price, a practice politicians and some investors blame for roiling markets.

Bear Market

Investor confidence has been eroded in recent weeks as a deadlock in the U.S. Congress brought the government to the brink of default and economic reports showed the nation’s economic recovery is faltering. Concern Europe’s debt crisis is widening also battered sentiment.

Benchmark indexes in China, Hong Kong, India, Taiwan and South Korea dropped last week to levels that were more than 20 percent from their peaks. Declines of that magnitude signify a bear market to some investors. The MSCI Asia Pacific now trades for 12.4 times estimated profit, compared with 14 times at the start of the year.

Leighton jumped 8.3 percent to A$21.49 in Sydney trading as it reiterated a return to annual profit after reporting a loss for the year to June 30 today. Ansell Ltd., the world’s No. 1 maker of surgical gloves, added 4.1 percent to A$13.68 after full-year net income beat analyst targets.

Alumina Upgrade

Alumina Ltd. climbed 8.2 percent to A$1.97 after Macquarie Group Ltd. upgraded the stock to “outperform” from “neutral.” Alumina, a partner in the world’s biggest producer of the material used to make aluminum, said on Aug. 11 first- half profit climbed 53 percent.

Hong Kong-listed PICC surged 10 percent to HK$13.40, the second-biggest gain in the MSCI Asia Pacific Index today. The company reported a 97 percent increase in first-half net income to 5.3 billion yuan ($829 million). That’s higher than the median 4.1 billion yuan profit estimate of six analysts surveyed by Bloomberg News. Ping An Insurance (Group) Co., China’s second-largest insurer, rose 8.9 percent to HK$67.65.

Nintendo Co., the world’s largest maker of video-game players, jumped 9.8 percent to 11,970 yen in Osaka on speculation that it may be included in the Nikkei 225 Stock Average should the city’s exchange merge with the Tokyo bourse.

Tokyo Stock Exchange Inc. is close to a takeover deal with Osaka Securities Exchange Co., the Yomiuri newspaper reported Aug. 13. Both companies have denied the report. A change of components in the benchmark Nikkei sometimes prompts funds that mirror the index to adjust their holdings.

“The expectation that Nintendo and other Osaka-listed shares would be included in the Nikkei if the two bourses manage to merge drove the shares higher,” Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo, said.

Nintendo posted the third-biggest biggest increase in MSCI’s Asian index today. Other companies listed on the Osaka exchange also gained. Murata Manufacturing Co. climbed as much as 3.3 percent, and Omron Corp. rose as much as 4.6 percent.

--With assistance from Akiko Ikeda and Toshiro Hasegawa in Tokyo. Editors: Darren Boey, Jason Clenfield

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net;

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.


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