Bloomberg News

Asia Stocks Edge Higher on Stimulus Hopes in China, Japan

April 13, 2012

Asian stocks edged higher this week amid speculation central banks in China and Japan will add to monetary stimulus and as better-than-estimated earnings at global companies from Fast Retailing Co. to Alcoa Inc. helped shares rebound from the longest slide since August.

China Construction Bank Corp. (939) led gains among mainland lenders after Chinese lending surged in March and as slower economic growth gave the government more room to ease monetary policy. Fast Retailing, Asia’s biggest clothier, rose 8 percent in Tokyo after forecasting record profit. Foxconn International Holdings Ltd. plunged 8.6 percent in Hong Kong after sales fell at Nokia Oyj, the handset maker’s biggest customer.

The MSCI Asia Pacific Index (MXAP) added 0.1 percent to 125.04, gaining for the first time in two weeks. The gauge gained 1.6 percent in the last two days, making up for losses earlier in the week amid concern Spain will become the next European country to need a bailout as bond yields rise. The benchmark rebounded after sliding for six days, the longest losing streak since August, and dropping on April 11 to its lowest level in more than two months.

“We’ve had a little rebound after markets slid too much,” said Linus Yip, a Hong-based strategist at First Shanghai Securities. “Whenever things get bad, stocks find support because investors expect central banks to add stimulus.”

Asia’s benchmark equity gauge has retreated 3 percent from the start of March as China cut its economic growth target and on speculation stocks rose too fast after the index climbed 13 percent in the first two months of the year. Shares on the MSCI Asia Pacific Index are valued at an average of 12.7 times estimated earnings, compared with 13.1 on the Standard & Poor’s 500 Index and 10.5 for the Stoxx Europe 600 Index.

Nikkei Trims Loss

Japan’s Nikkei 225 Stock Average dropped 0.5 percent this week, paring its decline after Bank of Japan Governor Masaaki Shirakawa on April 12 pledged to continue adding monetary stimulus.

South Korea’s Kospi Index (KOSPI) slipped 1 percent. The gauge trimmed losses after a North Korean rocket launch yesterday failed minutes after liftoff. The missile, which North Korea said would carry a satellite into orbit, fell into the sea after breaking into pieces, South Korea’s government said. The launch was condemned internationally as a violation of the reclusive state’s agreement to end nuclear and long-range missile tests in exchange for U.S. food aid.

Australia’s S&P/ASX 200 (AS51) added 0.1 percent. Shares gained after payrolls rose more than economists forecast in March, capping the best quarter since 2010.

Room to Ease

Hong Kong’s Hang Seng Index advanced 0.5 percent, climbing in the last two days after a report showed China’s bank lending surged in March to the most in a year and Nomura Holdings Inc. said China may soon cut interest rates.

Shares also gained as speculation intensified China may ease monetary policy after a report yesterday that mainland economic growth slowed last quarter to the least in almost three years.

Mainland lenders advanced. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, climbed 3.6 percent to HK$5.21. China Construction Bank, the second- largest, advanced 3.5 percent in Hong to HK$6.21. Bank of China Ltd. rose 3.8 percent to HK$3.27.

Fast Retailing (9983) rose 8 percent to 18,970 yen in Tokyo after raising its profit forecast to a record. Earnings will be led by higher sales of the company’s Uniqlo brand apparel overseas, President Tadashi Yanai said on April 12.

Stocks also gained after Alcoa, the biggest U.S. aluminum producer, reported an unexpected profit, boosting expectations for U.S. earnings season.

Debt Crisis Flares

Markets across Asia fell early in the week as Spanish yields surged closer to levels that prompted other European countries to seek bailouts. Spanish Prime Minister Mariano Rajoy said this week the country’s future is at stake in its battle to tame rising borrowing costs.

Esprit Holdings Ltd. (330), a Hong-Kong based clothier that counts Europe as its largest market, dropped 1.8 percent to HK$16.40. Canon Inc., a Japanese maker of cameras and office equipment that gets about depends on the region for about a third of its sales, slipped 1.4 percent to 3,790 yen.

Foxconn International, a Kowloon-based contract manufacturer, plunged 8.6 percent to HK$5.11 after sales at client Nokia fell. The Finnish company, which this week said its new smart phone has a software flaw, posted a surprise operating loss at its handset unit for the first three months and forecast no improvement this quarter. Nokia accounts for as much as 45 percent of Foxconn’s sales, according to Barclays Plc.

Samsung Electronics Co. (005930:US), Asia’s biggest exporter of consumer electronics and a supplier of touch screens to Nokia, dropped 4.8 percent to 1,268,000 won in Seoul.

Among other shares that fell this week, Sony Corp. and Sharp Corp. plunged after reporting record losses amid falling television prices and competition from Apple Inc. and Samsung. Sony dropped 12 percent to 1,444 yen after reporting a loss of 520 billion yen, including a 300 billion yen charge to write down assets. Sharp retreated 8.1 percent to 514 yen.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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


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