Bloomberg News

Asian Stocks Swing Between Gains, Losses on China, U.S. Data

February 01, 2012

Feb. 1 (Bloomberg) -- Asian stocks swung between gains and losses as weaker earnings and U.S. economic data that trailed estimates offset a report that showed China’s manufacturing industries unexpectedly expanded last month.

LG Display Co., a maker of liquid-crystal displays that gets 21 percent of sales from China, rose 2.4 percent in Seoul. Shipping stocks gained on speculation rising cargo rates will boost earnings. James Hardie Industries SE, a building materials supplier that counts the U.S. as its biggest market, fell 1.8 percent in Sydney. Sumitomo Heavy Industries Ltd. sank 9.6 percent in Tokyo after the machinery maker cut its full-year profit forecast by 28 percent.

The MSCI Asia Pacific Index slipped 0.1 percent to 122.74 as of 1:57 p.m. in Tokyo, having swung between gains and losses at least 10 times. About five shares rose for every four that fell in the gauge. In January, the measure posted its biggest monthly advance since September 2010 amid bets China will ease lending curbs, the U.S. economy is improving and Europe is containing its debts crisis.

“Signs that the Chinese economy is heading towards a soft landing are a very good scenario,” said Ng Soo Nam, Singapore- based chief investment officer at Nikko Asset Management Asia Ltd., which oversees about $165 billion. “The strong action by the European Central Bank to fix the region’s debt crisis has helped reassure investors. There’s going to be very tough negotiations with regard to the Greek debt situation, but most important is that a deal will eventually be struck.”

‘Solid Evidence’

Japan’s Nikkei 225 Stock Average was little changed, while South Korea’s Kospi Index swung between gains and losses. Australia’s S&P/ASX 200 Index slipped 0.8 percent. Hong Kong’s Hang Seng Index was little changed.

China’s Shanghai Composite Index dropped 0.4 percent, erasing gains of as much as 0.6 percent, on speculation a stronger-than-expected Chinese manufacturing report today reduces the need for further monetary-policy easing.

Companies that get revenue from China advanced. The purchasing managers’ index rose to 50.5 from 50.3 in December, China’s statistics bureau said in a statement today. That compares with a median estimate of 49.6 in a Bloomberg News survey of 17 economists. A reading above 50 indicates expansion.

“The stronger-than-expected PMI provides solid evidence that a hard landing for China’s economy is very unlikely,” said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd., who accurately predicted today’s reading.

U.S. Data

Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The gauge fell 0.1 percent in New York yesterday after a report showed that American consumer confidence unexpectedly dropped in January.

Exporters to the U.S. declined as falling home prices and cooling business activity added to signs the recovery in the world’s biggest economy may stall after expanding at the fastest pace since the second quarter of 2010.

The MSCI Asia Pacific Index gained 8 percent last month compared with increases of 4.4 percent by the S&P 500 and 4 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 1.3 times book value. That compares with 2.1 times for the S&P 500 in the U.S. and 1.4 times for the Europe Stoxx 600.

“Looking for the next big leg up in this market is quite challenging,” said Andrew Pease, Sydney-based chief strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion. “The prospects for the U.S. economy aren’t that great and earnings are going to be lackluster this year. Europe’s long-term refinancing option has taken the Armageddon scenario off the table notwithstanding the residual risk around the Greek debt deal.”

--Editors: Jim Powell, Nick Gentle

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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


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