Singapore / TaiPei: Asian stocks advanced, lifting the MSCI Asia Pacific Index to a two-week high, as faster economic growth in China and an improvement in the US manufacturing gauges fuelled optimism that the global economy is recovering.
Jiangxi Copper Co., China’s largest producer of the metal, surged 3.7% in Shanghai as commodity prices gained. Rio Tinto Ltd, the world’s No. 3 mining company, added 4.6% after Bank of America’s Merrill Lynch and Co. unit raised earnings estimates. Nissan Motor Co., which gets 34% of its revenue in North America, jumped 3.7%. Komatsu Ltd, the world’s No. 2 maker of earth moving equipment, gained 2.8%.
The MSCI Asia Pacific Index advanced 1% to 102.52 as of 7.28pm in Tokyo, the highest level since 3 July. The gauge, which gained 4.5% in the past three days, has rallied 45% from a five-year low on 9 March amid optimism stimulus policies around the world will revive the global economy.
Upbeat: Traders at the Shanghai Stock Exchange on Tuesday. China’s statistics bureau says the economy grew 7.9% in the second quarter. Qilai Shen / Bloomberg
This upward trend will continue for some time, as economic indicators have confirmed the economy is recovering, said a SinoPac Securities Investment Trust Co. fund manager, Harvey Chang, who helps oversee about $1.5 billion (Rs7,305 crore) . There’s plenty of money in the market.
Japan’s Nikkei 225 Stock Average added 0.8%, while Hong Kong’s Hang Seng Index gained 0.6%. China’s Shanghai Composite Index rose as much as 1% after the country’s statistics bureau said the economy grew 7.9% in the second quarter.
The Chinese gauge closed 0.2% lower amid concern its rally this year had overvalued earnings prospects.
Futures on Standard and Poor’s 500 Index lost 0.3% as lender CIT Group Inc. said it probably won’t receive a federal bailout.
The S&P 500 climbed 3% in New York on Wednesday after Federal Reserve figures showed industrial production shrank 0.4% last month, the least in eight months.
The New York Fed’s Empire Index rose to -0.6 this month, the highest level since April 2008.
Optimism an expansion of manufacturing will boost demand for materials lifted prices for copper and oil on Wednesday. Copper futures leapt 4.1% in New York, the most since 9 June. Crude oil jumped 3.4 %, the steepest climb since 23 June.
The MSCI Asia Pacific index is heading for its first weekly gain in three amid signs that Asian economies are recovering. Stocks on the gaugeare valued at an average 43 times reported earnings, up from the 15 times stocks were trading at during the market’s trough in March. Companies on the S&P 500 are currently at 14.8 times profit.
Singapore on July 14 forecast a narrower contraction in its gross domestic product this year.
New home sales in the city-state jumped 9.1% last month, government data released on Wednesday showed.
Australian business sentiment turned positive in June for the first time since December 2007, a National Australia Bank Ltd index released on 14 July showed.
“A rebound in the economy won’t be very fast but we don’t have to be too pessimistic in that the situation is getting better,” said Mitsushige Akino, who oversees the equivalent of $522 million at Ichiyoshi Investment Management Co.
I’m expecting relatively good earnings reports from companies because they have finished clearing inventories.
China-related stocks gained as the country’s second quarter economic growth rate beat economist estimates.
A 4 trillion yuan ($585 billion) stimulus package and the scrapping of lending restrictions for banks helped trigger the revival in the world’s third largest economy.
China has now overtaken Japan as the world’s second largest stock market by value for the first time in 18 months.
The Shanghai Composite has gained 75% this year compared with a 5.5% advance in the Nikkei 225. BLOOMBERG
Masaki Kondo in Tokyo contributed to this story.