Asian stocks rise after Chinese shares rebound from bear market

Asian stocks gained, lifting Chinese equities from a bear market, as Brambles Ltd. and Bank of Communications Ltd. reported better-than-estimated earnings.

Brambles, the world’s biggest supplier of pallets, surged 5.8 percent in Sydney, while Bank of Communications, China’s fourth-largest bank, added 1.3 percent in Hong Kong. Isuzu Motors Ltd., Japan’s third-biggest maker of commercial vehicles, rallied 5.4 percent as brokerages recommended buying Japanese automakers. Woodside Petroleum Ltd., Australia’s second-largest oil producer, gained 5.3 percent as oil rose.

The MSCI Asia Pacific Index added 0.5 percent to 110.85 as of 12:54 p.m. in Tokyo. The gauge has rallied 57 percent from a more than five-year low on March 9 amid speculation government stimulus measures and lower borrowing costs will revive the global economy.

“Share markets are trying to price in a substantial recovery,” said Jason Teh, who helps manage about $2.8 billion at Investors Mutual Ltd. in Sydney. “Elements of the economy are beginning to appear to have stabilized, but we’ve been through something that hasn’t been witnessed for decades and any recovery is vulnerable to hiccups.”

Japan’s Nikkei 225 Stock Average advanced 0.9 percent to 10,295.73. Hong Kong’s Hang Seng Index climbed 1.7 percent. QBE Insurance Group Ltd. surged 6.7 percent in Sydney after reporting increased first-half profit.

China’s Shanghai Composite Index advanced 2.1 percent. The gauge briefly fell into a bear market yesterday, denoted by a 20 percent decline from its peak this year on Aug. 4. The measure is now down 18 percent from that high.

U.S. Stocks Advance

Futures on the Standard & Poor’s 500 Index rose 0.3 percent. The U.S. gauge advanced 0.7 percent yesterday as energy stocks gained, while Merck & Co. led drugmakers higher after a judge upheld a patent.

Better-than-estimated earnings and economic reports have fueled the five-month rally in Asian equities. A third of the 515 companies in the MSCI Asia Pacific Index that have reported results since early July have beaten analysts’ profit estimates, while 18 percent have missed, according to data compiled by Bloomberg.

“The consensus remains among investors that the global economy is on course for a recovery, but we have to see further improvement in the economy and company earnings for markets to go up higher,” said Kiyoshi Ishigane, a strategist at Mitsubishi UFJ Asset Management Co., which oversees about $53 billion.

The MSCI Asia Pacific Index’s climb since March has lifted the average price of shares in the gauge to 24 times estimated earnings, compared with 17 times for the S&P 500 and 14 times for the Dow Jones Stoxx 600 Index in Europe.

Beating Estimates

Brambles jumped 5.8 percent to A$7.30. The company said annual net income fell 30 percent to $452.6 million, exceeding the $419.2 million average of five analyst estimates. QBE rose 6.7 percent to A$22.13 after saying first-half profit climbed 19 percent on premium growth and foreign exchange gains, beating expectations of investors including White Funds Management Pty.’s Angus Gluskie.

Bank of Communications gained 1.3 percent to HK$9.19 in Hong Kong. The company said net income for the second-quarter was little changed at 7.62 billion yuan ($1.1 billion). That’s higher than the average estimate of 7.24 billion yuan from nine analysts in a Bloomberg survey.

China’s stocks are set to rebound from this month’s plunge on prospects earnings will beat estimates and policy makers will maintain bank lending, Bank of America Corp.’s Merrill Lynch unit said. The Shanghai Composite Index has retreated 17 percent in August.

Woodside Petroleum advanced 5.7 percent to A$46.78 in Sydney. Inpex Corp., Japan’s largest oil explorer, gained 2.1 percent to 716,000 yen in Tokyo. PetroChina Co., the nation’s biggest oil producer, climbed 3.8 percent to 13.48 yuan in Shanghai.

Oil Prices

Crude oil for September delivery rallied 4.7 percent to $72.42 a barrel in New York. U.S. oil stockpiles dropped 8.4 million barrels last week, the most since the week ended May 23, 2008, a report from the Energy Department showed.

Isuzu climbed 5.9 percent to 198 yen after Nikko Citigroup Ltd. raised its recommendation to “hold” from “sell.” Hino Motors Ltd. advanced 4 percent to 387 yen after upgrades at Nikko Citigroup and Daiwa Securities.

Source: Bloomberg