Stuart Kelly and Makiko Suzuki, Bloomberg
Sydney/Tokyo: Japan Airlines Corp., Asia’s biggest carrier by sales, jumped the most in a month after saying operating profit rose to an all-time high. Tokyo Electron Ltd, the world’s No. 2 supplier of chip-making equipment, had its largest gain in three weeks after a newspaper reported the company’s profit this year will climb to a record on demand for chips used in personal computers.
The Topix index posted its biggest advance since March as Japan’s shares resumed trading after a two-day holiday last week, when benchmarks in Australia, Hong Kong, South Korea, Singapore, Malaysia and Indonesia set new highs.
“Technology stocks are my favorites because I expect the companies will achieve a better profit growth than other sectors,” said Yoshinori Nagano, who helps oversee about $70 billion (Rs2,85,804 crore) at Daiwa Asset Management Co. in Tokyo. “Japan’s market had a broad rally because it lagged behind overseas markets.”
Sumitomo Metal Mining Co. led mining shares higher after the price of copper climbed and nickel reached a record high. Canon Inc. and Samsung Electronics Co. rose, buoyed by lower oil prices and speculation the U.S. Federal Reserve will cut interest rates in the region’s biggest export market this year.
The Morgan Stanley Capital International Asia-Pacific Index added 1.5% to 149.52 at 8:16 pm in Tokyo, the biggest rise since 4 April. All 10 industry groups rose.
Japan’s Nikkei 225 Stock Average gained 1.6% while the broader Topix climbed 1.7%. The nation’s markets were closed for three days last week. All indexes in the region advanced, except India, Singapore, New Zealand, Pakistan and Sri Lanka. China and Thailand were closed for holidays.
Hang Lung Properties Ltd led Hong Kong developers higher after the South China Morning Post said Wheelock Properties Ltd offered to buy a local residential site on speculation land prices are set to rebound.
U.S. stocks climbed for a fifth straight week, the longest rally since October as the Labor Department said U.S. employers last month added the fewest jobs in more than two years.
Japan Airlines, Asia’s biggest carrier by sales, rose 2.6% to 234 yen, its biggest gain since 4 April. Japan Air had an operating profit of 22.9 billion yen in the fiscal year ended 31 March, it said in a preliminary earnings statement on 2 May, compared with a forecast of 13 billion yen. The company will release official earnings results on 9 May.
Japan Air’s domestic passengers increased last fiscal year for the first time in four years as the country’s longest postwar economic expansion spurred an increase in air travel. The company also sold hotels and a stake in an airport store operator.
Tokyo Electron, the world’s second-largest supplier of chip-making equipment, rose 1.4% to 8,450 yen, its largest advance since 17 April. Net income will probably rise 9% to about 93 billion yen ($775 million), a record, in the year ending March 2008, the Nikkei newspaper reported, without saying where it got the information.
“The forecast is speculation by the Nikkei,” said Ken Sasagawa, the Tokyo-based company’s spokesman. Tokyo Electron is scheduled to release earnings for the 12 months ended 31 March and outlook for the current year on 11 May.
Tokyo Electron in February said it is on track for a record net income in the year just ended, and profit and sales gains this year as customers such as Toshiba Corp. spend more on equipment to meet demand for flash memory chips used to store songs and videos in music players and mobile phones. Microsoft Corp.’s Windows Vista operating system may also boost demand as it requires more memory than the previous version of the software.
Elsewhere, DBS Group Holdings Ltd, Singapore’s largest lender, jumped 3.1% to S$23.50, set for its biggest gain since 13 October.
Analysts at Credit Suisse Group, JPMorgan Chase & Co. and Daiwa Institute of Research raised their share-price estimates after the company said on 4 May first-quarter profit climbed 19% from a year earlier to S$617 million ($405 million) as growth in lending boosted net interest income. Profit topped the median estimate of S$582 million in a Bloomberg News survey of five analysts.
Australia’s largest fertilizer maker, surged 5% to A$55.38. First-half profit jumped more than fivefold from a year earlier to A$57.2 million ($47 million) after it cut costs, beating the A$43.3 million median estimate in a Bloomberg survey of four analysts.
Sumitomo Metal Mining, Japan’s biggest nickel producer, gained 5.4% to 2,620 yen. Korea Zinc Co., the world’s second-biggest smelter of the metal, rose 3% to 153,500 won. BHP Billiton Ltd, the world’s biggest mining company, gained 3.1% to A$31.56.
A measure of six metals traded on the London Metal Exchange limbed 2.1% on 4 May. Copper rose 0.8%, while nickel jumped 3.6% to a record high.
“Mining companies will eventually get re-rated by the market if metals prices manage to stay close to these levels because it will demonstrate that their earnings are more sustainable than the market has been giving them credit for,” said Adnan Kucukalic, a Sydney-based strategist at Credit Suisse.
Canon, the world’s largest seller of digital cameras, rose 4.1% to 7,090 yen, poised for its biggest gain since 16 February. Samsung, the second-largest semiconductor maker, climbed 1.9% to 587,000 won. AU Optronics Corp., the world’s No. 3 maker of liquid-crystal displays, advanced 1.7% to NT$54.90 in Taiwan.
Oil dropped 6.8% drop last week because of ample U.S. supplies and signs gasoline output is rising. Crude for June delivery was recently at $62.01 in after-hours trading in New York. Lower fuel prices give consumers more to spend on goods and services.
The 88,000 rise in U.S. employment last month followed a 177,000 gain in March that was smaller than previously estimated. The jobless rate rose to 4.5% from 4.4%, matching a five-year low. The report also showed that average hourly earnings grew at a rate that trailed economists’ forecasts.
The data spurred traders to increase bets the Fed will lower interest rates this year after increasing them from 2004 to 2006. Still, policy makers are forecast by all 90 economists polled by Bloomberg to leave the target for the overnight lending rate between banks unchanged at 5.25% when they hold their third meeting of the year on 9 May.
“Investors switched to the view that a rate cut may happen sooner than they anticipated and that boosted shares,” said Kenji Tomida, who oversees $16 billion as chief fund manager at T&D Asset Management Co. in Tokyo.
Hong Kong Developers
The Hang Seng Property Index climbed 0.5%, its fourth day of gains. Hang Lung Properties, Hong Kong’s fourth- largest developer by market value, gained 3.3% to HK$24.80. Henderson Land Development Co., the third biggest, climbed 2.4% to HK$55.35.
Wheelock Properties has offered to buy a residential site in Hong Kong’s West Kowloon for at least HK$4.2 billion ($537 million). It is the highest minimum bid for a plot in the city since September 2005, the South China Morning Post reported, without saying where it got the information.
Meanwhile, Hong Kong’s government tomorrow will hold its first land auction of the 2007-08 financial year. The 8,060 square-meter site in the city’s West Kowloon district, which is set to sell for at least HK$2.61 billion, is designated for non- industrial use.
— With reporting by Kyung Bok Cho in Seoul and Hanny Wan in Hong Kong