Bloomberg News

Asian Stocks Cap First Weekly Gain This Year on China, Yellen

February 14, 2014

Asian shares rose, with the regional benchmark capping its first weekly gain this year, as China’s trade data beat estimates and Janet Yellen’s first official address as head of the Federal Reserve buoyed optimism about the U.S. economy.

China Cosco Holdings Co., the nation’s biggest cargo line, gained 3.9 percent in Hong Kong. Samsung Electronics Co., an electronics maker that gets almost 30 percent of its revenue (005930:US) from North America, gained 2 percent in Seoul. Australia & New Zealand Banking Group Ltd., Australia’s third-largest bank by market value, surged 6.4 percent after its first-quarter cash profit climbed 13 percent from a year earlier. Kirin Holdings Co., Japan’s biggest beverage maker, slumped 7 after its forecast missed estimates. The Topix index yesterday erased its weekly gain after the yen strengthened.

The MSCI Asia Pacific Index gained 1.6 percent to 135.35 this week, the biggest weekly rally since the period ended Nov. 15, paring this year’s drop to 4.2 percent. Global equity losses in 2014 peaked around $3 trillion on Feb. 4 and have since narrowed to $587 billion as of yesterday, data compiled by Bloomberg show.

China’s trade data were “like a double present for the market,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “Exports were good and we know they are still targeting internal growth, and I think that’s quite positive.”

China’s Trade

Hong Kong’s Hang Seng Index rose 3.1 percent this week. The Hang Seng China Enterprises Index of mainland companies listed in the city, also known as the H-share index, gained 3 percent. The Shanghai Composite Index, added 3.5 percent.

China’s overseas shipments increased 10.6 percent from a year earlier, the General Administration of Customs said Feb. 12 in Beijing, compared with the median projection of economists for a 0.1 percent gain. Imports advanced 10 percent, leaving a trade surplus of $31.9 billion, the widest for January since 2009.

China Cosco (1919) climbed 3.9 percent to HK$3.45. China Shipping Container Lines Co., the nation’s second-largest cargo-box carrier, soared 6.6 percent to HK$1.95.

The comparison with year-earlier trade figures may be distorted because of false invoices to disguise capital flows in 2013 and the different timing of the weeklong Lunar New Year holiday. A widening discrepancy between Hong Kong and Chinese data for bilateral trade in December spurred speculation that mainland trade numbers are again exaggerated because of fake exports.

Data yesterday showed China’s inflation stayed subdued at a 2.5 percent rate in January while factory-gate prices extended the longest drop since the 1990s, in a sign of moderating demand in the world’s second-largest economy.

Regional Gauges

Japan’s Topix (TPX) index slid 0.4 percent while the Nikkei 225 Stock Average lost 1 percent, both erasing this week’s gains yesterday as the yen reversed losses against the dollar.

South Korea’s Kospi Index fell 1 percent after the central bank left its key interest-rate unchanged. Australia’s S&P/ASX 200 Index surged 3.7 percent, extending gains after the central bank said a weaker currency will help restore growth. A government report this week showed that the nation’s unemployment rate rose to 6 percent, the highest in more than a decade. New Zealand’s NZX 50 Index gained 1 percent.

Singapore’s Straits Times Index gained 0.9 percent, while Taiwan’s Taiex Index added 1.5 percent.

Shares also rose as investors were encouraged after Yellen this week delivered her first public remarks as head of the U.S. central bank.

Fed Mandate

“I am committed to achieving both parts of our dual mandate: helping the economy return to full employment and returning inflation to 2 percent while ensuring that it does not run persistently above or below that level,” she said.

The Federal Open Market Committee has twice reduced the size of the monthly asset-purchase program, cutting bond buying to $65 billion from $85 billion.

Samsung added 2 percent to 1,301,000 won. LG Electronics Inc., a South Korean TV maker that gets 22 percent of its sales in North America, rose 2.1 percent to 62,500 won in Seoul.

Australia & New Zealand Banking rose 6.4 percent to A$31.34. Unaudited cash profit, which excludes one-time items, rose to A$1.73 billion ($1.56 billion) in the three months ended Dec. 31 and unaudited net profit climbed 21 percent to A$1.64 billion, the Melbourne-based bank said.

Olympus Corp. jumped 5.3 percent to 3,275 yen in Tokyo. The optics maker reported third-quarter operating profit of 21.4 billion yen ($210 million), compared with the average estimate of 19.2 billion yen from analysts surveyed by Bloomberg.

Qantas Airways Ltd. soared 14 percent to A$1.215 after the Sydney Morning Herald reported that Australian Treasurer Joe Hockey said the nation’s biggest carrier met pre-conditions for government support.

Earnings Analysis

Of the 331 companies on the MSCI Asia Pacific Index that have reported quarterly earnings since the beginning of January and for which estimates are available, 54 percent beat profit expectations as of Feb. 13, according to data compiled by Bloomberg.

Japanese beverage makers declined. Kirin dropped 7 percent to 1,293 yen after saying profit will probably drop 43 percent to 49 billion yen this year, while analysts had expected a 60.6 billion yen gain. Asahi Group Holdings Ltd. lost 3.5 percent to 2,625 yen after the brewer’s net-income outlook also missed estimates.

Demand for beer is shrinking in Japan, where the population is falling and the economy is expected to slump after the sales tax rises to 8 percent from 5 percent in April.

The MSCI Asia-Pacific gauge ended the week trading at 12.7 times estimated earnings, compared with multiples of 15.6 for the S&P 500 and 14.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

Feb. 14 (Bloomberg) -- Chang Jian, a Hong Kong-based economist at Barclays Plc, talks about the outlook for the nation's economy and the government's policies. China's inflation stayed subdued in January while factory-gate prices extended the longest drop since the 1990s, in a sign of moderating demand in the world’s second-largest economy. Chang speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg) Feb. 11 (Bloomberg) -- Federal Reserve Chairman Janet Yellen delivers her semi-annual report on monetary policy before the House Financial Services Committee in Washington. (This is her prepared statement. Source: Bloomberg)

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