Bloomberg News

Asian Stocks Advance as Wen Signals More China Stimulus

August 16, 2012

Asian stocks rose, with the region’s benchmark index erasing yesterday’s decline, after Premier Wen Jiabao said slower inflation has given China more room to adjust monetary policy.

Fanuc Corp. (6954), a maker of industrial robots used in Chinese factories, gained 4.3 percent in Tokyo. Goodman Fielder Ltd. fell 1.8 percent after the Australian baker said it hasn’t received a takeover proposal from Wilmar International Ltd. Daphne International Holdings Ltd. surged 8.2 percent in Hong Kong after first-half profit increased at the footwear maker.

The MSCI Asia Pacific Index (MXAP) rose 0.5 percent to 120.47 as of 7:15 p.m. in Tokyo, with three stocks climbing for every three that declined. The gauge fell 7 percent from this year’s high on Feb. 29 through yesterday on concern earnings would be hurt by Europe’s debt crisis and China’s slowdown.

“Wen reiterated that the government is trying to support growth,” said Benjamin Tam, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. ‘The market has been expecting the Chinese government to do more to boost economic growth in the second half.’’

The regional benchmark index traded at 12.5 times estimated earnings compared with 13.6 for the Standard & Poor’s 500 Index (SPXL1) and 11.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average increased 1.9 percent and Australia’s S&P/ASX 200 Index (AS51) gained 1.1 percent. South Korea’s Kospi Index was little changed percent after a holiday yesterday. Shanghai Composite Index declined 0.3 percent. Singapore’s Straits Times Index was little changed.

Hong Kong’s Hang Seng Index slid 0.4 percent. China Mobile Ltd. dragged the index lower, dropping 5 percent after the world’s No. 1 phone company by subscribers reported earnings that missed estimates.

China’s state radio reported Wen as saying there’s “growing room for monetary policy operation.” He said downward pressure on the economy remained “relatively large,” according to state radio.

The comments may bolster speculation China will cut banks’ reserve requirements or benchmark interest rates again after inflation slowed to a 30-month low in July, export growth collapsed and new yuan loans trailed estimates. A report today showed foreign direct investment in China fell to the lowest level in two years in July.

“The Premier seldom makes such direct remarks, but he might want to emphasize that government wants to support the economy by monetary policies,” said Kiyoshi Ishigane, a Tokyo- based strategist at Mitsubishi UFJ Asset Management Co., which oversees about $70 billion. “Wen’s remarks are pushing it, and that’s a positive catalyst for the markets.”

Fanuc, Komatsu

Fanuc gained 4.3 percent to 13,120 yen in Tokyo. Komatsu Ltd., a Japanese construction-equipment maker that gets about 10 percent of its revenue from China, advanced 3.3 percent to 1,742 yen.

Daphne jumped 8.2 percent to HK$8.21 in Hong Kong after its profit for the six months ended June 30 rose 9.6 percent from a year earlier. Lenovo Group Ltd. (992) gained 6.3 percent to HK$6.60 after the personal-computer maker posted a 30 percent increase in first-quarter profit, expanding market share to almost pull even with leader Hewlett-Packard Co.

Tencent Holdings Ltd. (700), China’s No. 1 Internet company, climbed 6.4 percent to HK$244.60 after its second-quarter profit jumped 32 percent as it drew more advertisers to its social- networking websites and added online-game players.

Of the 1,008 companies listed on the Asian benchmark gauge, 118 are reporting earnings this week, according to data compiled by Bloomberg. Of the 428 companies that have posted quarterly results since July 1, and for which Bloomberg has estimates, fewer than half have beaten expectations.

U.S. Manufacturing

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The gauge advanced 0.1 percent yesterday in New York as investors weighed manufacturing data for clues on whether the Federal Reserve will move to stimulate the economy.

Industrial production in the U.S. increased in July, while a separate report showed manufacturing in the New York area unexpectedly contracted in August for the first time since October.

“The U.S. economic data are mixed and business sentiment is neither good nor bad,” said Mitsushige Akino, who oversees about $633 million in Tokyo at Ichiyoshi Investment Management Co. “That’s boosting expectations the Fed may add to quantitative easing.”

Goodman Fielder lost 1.8 percent to 54.5 Australian cents in Sydney. The company said it hasn’t received a takeover proposal from Singapore-based Wilmar after the world’s largest palm-oil processor said it had planned a bid.

Wilmar’s Chief Executive Officer Kuok Khoon Hong said yesterday the company had discussed offer prices with Goodman’s board after taking a 10 percent stake in the baker on Feb. 28. There was no formal bid and Wilmar was now prepared to sell its holding, he said.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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


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