By Chen Shiyin and Patrick Rial, Bloomberg
Singapore: Asian stocks rose for a third day, led by Japanese banks after Mizuho Financial Group forecast record earnings and after the news that Mitsubishi UFJ Financial Group will raise its dividend.
Nintendo Co. led technology shares moved higher after it was forecast that US sales of as many as 35 million Wii video-game consoles. Airline stocks gained on expectations that Singapore Airlines Ltd. will buy a stake in China Eastern Airlines Corp.
Financial shares climbed the most among the 10 industry groups included in the Morgan Stanley Capital International Asia- Pacific Index. Mizuho, Japan’s No. 2 lender, jumped by the most in more than a year and bigger rival Mitsubishi posted its largest gain in almost eight months.
“The banks are really standing out as their earnings have fostered some confidence,” said Hideyuki Ookoshi, who oversees $365 million at Chiba-Gin Asset Management in Tokyo. “Their shares had been falling on worries about their relationships with consumer lenders, but now those have passed and investors are becoming comfortable about buying.”
The MSCI index rose by 0.2% to 149.72 in Tokyo, adding to a two-day, 1.4% rally. The measure is about 0.3% below a record close of 150.12 set on 9 May.
Japan’s Nikkei 225 Stock Average climbed by 0.1% to 17,705.12, while benchmarks in Hong Kong, Malaysia, Thailand, India and the Philippines declined. China’s CSI 300 Index rose by 1.8% to its third straight record, along with key indexes in Singapore, Indonesia and South Korea.
Financial and real-estate companies led most US stocks higher for a third day after Treasury Secretary Henry Paulson said the slump in housing is “largely” over.
The Topix Banks Index jumped by 3.8% on 23 May, the biggest advance among 33 industry groups.
Net income will climb by 21% to 750 billion yen ($6.18 billion) in the financial year ending 31 March, Mizuho said on 22 May after the close of trading. That would be the biggest profit since Mizuho was formed in 2003.
Shares of Mizuho surged by 5.5% to 847,000 yen, set for the biggest advance since January 2006. It will also spend as much as 150 billion yen buying back shares and raise its full-year dividend by 43%.
Sumitomo Mitsui Financial Group, Japan’s No. 3 lender by assets, jumped by 5.4% to 1.18 million yen, adding to yesterday’s 5.7% surge. The lender on May 21 forecast profit will rise by 22% this financial year.
“Banks didn’t announce any negative news with their earnings,” said Kazuyuki Terao, who helps oversee $1.7 billion at RCM Japan Ltd. in Tokyo. “Their shares were heavily oversold and so, without any negative news and the fundamentals not looking bad either, investors are piling in.”
Mitsubishi UFJ rose by 3.7% to 1.41 million yen. The lender plans to pay dividends of 14,000 yen for this financial year and 11,000 yen for the one ended on 31 March, the Nikkei reported. The company, which is due to announce earnings today, previously planned to pay a 10,000 yen dividend for last year, the report said.
Nintendo shares rose by 3.2% to 42,100 yen. The company’s forecast of sales of as many as 35 million Wii video- game consoles in the US is close to the record 38.2 million PlayStation 2 players sold by Sony Corp.
The company will reach its goal by 2011 or 2012, George Harrison, marketing chief at Nintendo of America, a unit of Kyoto-based Nintendo, said on 22 May .
“The target doesn’t sound too difficult to achieve” and Wii suppliers should benefit, said Sun Min-Cheng, who helps manage the equivalent of $120 million at Fubon Asset Management in Taipei. “Wii is the best-seller among new-generation game consoles.”
Getting a Foothold
Foxconn Technology gained by 0.3% to NT$343.50 in Taiwan. The company is a unit of Hon Hai Precision and assembles Wii for Nintendo. Hon Hai, the country’s biggest electronics maker, rose by 0.8 % to NT$246.50.
Singapore Air, Asia’s most profitable airline, climbed by 1.6% to S$18.70. The company said it’s in “advanced” talks for a potential investment, without elaborating.
The carrier and China Eastern Airlines yesterday separately suspended trading of their shares, fueling speculation the Singapore-based carrier may announce plans to invest in the Chinese airline.
“Getting that foothold is important,” said Christopher Wong, who helps manage $25 billion at Aberdeen Asset Management in Singapore, including shares of Singapore Airlines. “Shanghai is an important hub and having a foothold can bring the wider operations of Singapore Airlines to a different level.”
China Eastern shares were still halted today. The company said “nothing has been finalized” and there’s no timetable for an announcement.
Qantas Airways, Australia’s biggest, rose by 1.9% to A$5.42. It was the target of a failed A$11.1 billion ($9.1 billion) buyout from a group that included TPG and Onex Corp.
The stock was raised to “buy” from “neutral” by Simon Mitchell, an analyst at UBS . He cited increasing earnings and said the company may buy back A$2 billion of stock. Paul Ryan, an analyst at Goldman Sachs JB said on 22 May raised Qantas to “buy” from “hold.”
Meanwhile, China Vanke Co. led gains in China after the Shanghai Securities News said the government doesn’t plan to increase stock transaction fees.
“Any news concerning the change in the stock transaction fee will have an impact with the market at a record high,” said Fan Dizhao, who helps manage the equivalent of $1.8 billion at Guotai Asset Management Co. in Shanghai. “Today’s denial news should be giving a lift to the market.”
China Vanke, the nation’s biggest developer, gained by 4.9% to 18.25 yuan. China Merchants Bank Co., the No. 3 publicly traded lender, added 2.7% to 21.21 yuan.
Elsewhere, LG.Philips LCD Co., the world’s second-largest maker of liquid-crystal displays, lost by 3.4% to 38,300 won.
Royal Philips Electronics NV, Europe’s largest maker of consumer electronics, is in talks to sell all or part of its holding in LG.Philips, CEO Gerard Kleisterlee said at an industry conference in Florida broadcast over the Internet on 22 May.