Asian stocks rise on back of recovery optimism

Asian stocks rose, lifting the MSCI Asia Pacific Index to a nine-month high, after Australia’s treasurer said the worst of the global recession may have passed and Goldman Sachs Group Inc. raised its estimate for the U.S. Standard & Poor’s 500 Index.

Fairfax Media Ltd., Australia’s No. 2 newspaper owner, surged 6.3 percent, while James Hardie Industries NV, the biggest seller of home siding in the U.S., climbed 6.5 percent in Sydney. Mitsubishi Corp., a Japanese trading company that gets more than half its revenue from resources, jumped 4.7 percent as oil and metals prices advanced.

“I think the recession is clearly over. Confidence is back,” Chong Yoon Chou, Singapore-based investment director at Aberdeen Asset Management Asia Ltd., which has $27 billion of assets, said in an interview on Bloomberg Television. “What we’ve seen in the last quarter is that things are getting started again and orders are coming back.”

The MSCI Asia Pacific Index added 1.3 percent to 106.12 as of 12:45 p.m. in Tokyo, headed for a sixth gain and the highest close since Oct. 2. The gauge has climbed 50 percent from a five-year low on March 9 amid optimism stimulus policies worldwide will revive the global economy.

The Nikkei 225 Stock Average climbed 1.4 percent in Japan, where stock markets were closed yesterday, while South Korea’s Kospi Index rose 0.5 percent.

New Zealand’s NZX 50 Index advanced 1.6 percent. Sky City Entertainment Group Ltd., the country’s biggest casino operator, surged 7.3 percent after saying annual profit more than doubled.

CIT Financing

Australia’s S&P/ASX Index was little changed. Harvey Norman Holdings Ltd., the nation’s largest electronics retailer, sank 6.6 percent, the sharpest decline on the MSCI World Index, after reporting sales growth that missed analyst estimates. Neptune Orient Lines Ltd., Southeast Asia’s biggest container carrier, sank 1.8 percent in Singapore on lower freight rates.

Futures on the S&P 500 dipped 0.4 percent. The gauge climbed 1.1 percent in New York yesterday. Shares of CIT Group Inc., which provides financing to almost 1 million small businesses, soared 79 percent after a person briefed on the board’s deliberations said the lender has reached a financing agreement with bondholders.

Fairfax surged 6.3 percent to A$1.35 in Sydney, and rival West Australian Newspapers Holdings Ltd. jumped 9.4 percent to A$5.35. Australian Treasurer Wayne Swan told reporters today that the worst of the global recession “may be behind us.”

S&P 500 Target

James Hardie, which gets more than three-quarters of its revenue in the U.S., surged 6.5 percent to A$4.62 in Sydney. Komatsu Ltd., a construction-machinery maker that gets a quarter of its sales from the Americas, climbed 4.3 percent to 1,470 yen in Tokyo. Honda Motor Co., Japan’s No. 2 automaker, rose 2.2 percent to 2,530 yen after saying it will increase overtime at two plants in the country to meet demand.

David Kostin, Goldman Sachs’ U.S. strategist, boosted his year-end estimate for the S&P 500 to 1,060 from 940, citing earnings reports that have been stronger than expected. The gauge closed at 951.13 yesterday.

The move mirrored similar upgrades in Asia. Morgan Stanley raised its estimate for the Kospi index by 23 percent yesterday. Citic Securities Co., China’s largest brokerage by market value, boosted its 2009 earnings growth estimate for companies listed in the country to 14 percent from an earlier 9 percent.

The MSCI Asia Pacific Index last week had its biggest weekly advance since May as Intel Corp. forecast sales that beat analyst estimates and International Business Machines Corp. raised its profit target. Government reports showed economic growth accelerated in China and U.S. manufacturing improved.

Relief Rally

“The earnings recovery of U.S. companies is following a familiar pattern of conservative guidance being beaten and giving rise to a relief rally,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion.

The MSCI Asia Pacific Index’s rally has lifted average valuations of shares in the benchmark gauge to 24 times estimated earnings, and 1.5 times book value, up from 14 times and 1.2 times respectively at the start of the year.

Japan’s Topix index gained 1.7 percent, led by trading companies and metals producers. Mitsubishi, the nation’s largest trading house by market value, added 4.7 percent to 1,780 yen, and Sumitomo Metal Mining Co., Japan’s top nickel producer, leapt 6.3 percent to 1,360 yen.

A gauge of six metals in London climbed for a sixth session yesterday, the longest stretch since March 2006, while crude oil rose for a fifth day today.

Sky City

Sky City Entertainment climbed 7.3 percent to NZ$3.07. Net income was as much as NZ$116 million ($76 million) for the year ended June 30 from NZ$49.9 million a year earlier when the company took a charge against its cinema unit, the company said.

The result exceeded forecasts in April, when Sky City said it expected net income to be within a range of NZ$99 million to NZ$106 million.

Shipping lines fell on concern falling rates will reduce their earnings. The Baltic Dry Index, a measure of shipping costs for commodities, declined for the first time in five sessions yesterday.

Neptune Orient sank 1.2 percent to S$1.65 in Singapore. STX Pan Ocean Co., South Korea’s top bulk carrier, slid 1.3 percent and Hyundai Merchant Marine Co. lost 1 percent.

Harvey Norman sank 6.3 percent to A$3.25. Total sales increased 4.5 percent to A$1.49 billion ($1.2 billion) in the three months ended June, the company said. Revenue from stores open at least a year rose 2 percent, missing the 5 percent median estimate of analysts in a Bloomberg News survey.

Source: Bloomberg