Bloomberg News

Asia Stock Index Poised for Weekly Gain as Japan’s Topix Climbs

May 17, 2013

Asia’s benchmark stock index is poised for a second weekly advance after Japan’s Topix Index closed at the highest level since 2008 as leasing companies rallied on a report Prime Minister Shinzo Abe will encourage the practice as part of his growth strategy.

Orix Corp., which provides leasing and loans, jumped 9.2 percent in Tokyo. Mizuno (8022) Corp. surged 18 percent after the Japanese sportswear company more than doubled its net-income forecast. Singapore Airlines Ltd. dropped 4.6 percent after posting a wider operating loss. WorleyParsons (WOR) Ltd., Australia’s largest oil and gas engineering company, plunged 13 percent after forecasting weaker earnings.

The MSCI Asia Pacific Index dropped 0.2 percent to 142.77 as of 6:31 p.m. Tokyo time. The gauge increased 11 percent this year through yesterday as the Bank of Japan took steps to counter deflation and policy makers in the U.S. and Europe remained on standby to buoy growth. The measure is heading for a 0.7 percent advance this week.

“The market is trading in a tight range as profit-taking takes place while investors buy on dips,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees the equivalent of $33 billion.

Shares on the MSCI Asia Pacific Index traded at 14.3 times estimated earnings yesterday, compared with 15 for the Standard & Poor’s 500 Index and 13.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Overheating Signs

Japan’s Nikkei 225 (NKY) Stock Average rose 0.7 percent to its highest close since December 2007, while the broader Topix Index added 0.6 percent to the highest since August 2008. Both gauges have climbed 46 percent this year as the Bank of Japan introduced unprecedented monetary easing.

The 14-day relative strength index, a measure of trading momentum, has held above 70 for both the Nikkei 225 and the Topix for the past six days. That’s a level some traders say signals a sell-off.

“In the short term, the Japanese market looks overbought, but in the long term it’s not,” Robert Aspin, Singapore-based head of equity investment strategy for wealth management at Standard Chartered Plc., said in an interview. “We’re looking for the market to come off a little bit and go through a period of consolidation.”

Investors are more confident in a Japanese leader than any time since at least September 2010. Abe’s policies are viewed more positively than those of his counterparts in the U.S., Europe and China, according to a worldwide poll of investors, analysts and traders who are Bloomberg subscribers.

U.S. Futures

China’s Shanghai Composite Index advanced 1.4 percent. Australia’s S&P/ASX 200 Index (AS51) added 0.3 percent, while New Zealand’s NZX 50 Index fell 0.8 percent. Taiwan’s Taiex Index lost 0.3 percent. The Philippine Stock Exchange Index dropped 0.4 percent. Markets in South Korea and Hong Kong are closed for holidays.

Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The index fell 0.5 percent in New York yesterday, halting four days of record gains, after jobless claims jumped by 32,000 to 360,000 last week, the most since the end of March. Housing starts slumped 16.5 percent in April, the most since February 2011, the Commerce Department reported.

Japanese leasing companies rallied after the Nikkei newspaper reported the government will encourage leasing to revive capital spending to a level last seen before the collapse of Lehman Brothers Holdings Inc. Abe will outline a growth plan in a speech later today, the report said.

Leasing Companies

Orix jumped 9.2 percent to 1,638 yen. Mitsubishi UFJ Lease & Finance Co. (8593), the leasing company partly owned by Japan’s biggest lender, surged 17 percent to 597 yen. Century Tokyo Leasing Corp. climbed 6 percent to 3,200 yen.

Mizuno advanced 18 percent to 505 yen. The company forecast net income will increase 116 percent to 4.2 billion yen in the year ending March 2014.

Daiwa Securities Group Inc. gained 1.1 percent to 1,000 yen. Japan’s second-largest brokerage said it plans to increase staff at its retail branches by 50 percent over the next few years as the stock rally boosts demand from household investors.

Chinese property developers advanced on speculation the government won’t impose additional property curbs as the economy slows. Poly Real Estate Group Co. (600048) rose 2.6 percent to 12.38 yuan in Shanghai. Gemdale Corp. gained 3.5 percent to 7.71 yuan.

Among stocks that dropped, Singapore Airlines slid 4.6 percent to S$10.93. The carrier’s fourth-quarter operating loss widened to S$44.2 million from S$5.2 million ($35 million from $4.1 million) a year earlier on lower passenger and cargo fares.

WorleyParsons sank 13 percent to A$19.50 in Sydney. Underlying earnings for the year ended June 30 will be A$320 million ($314 million) to A$340 million as clients in Western Australia defer major resource-extraction projects, the Sydney-based engineering company said today in a statement. The company had forecast in February that underlying earnings would exceed last year’s A$345.6 million.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net


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