Sydney / Tokyo: Asian stocks rose for a second day on Tuesday as earnings reports and brokerage upgrades boosted confidence that corporate profits are recovering from the global recession.
Aioi Insurance Co. Ltd climbed 4.2% in Tokyo on higher profit, even after a magnitude 6.5 earthquake injured at least 40 people in Japan. Tencent Holdings Ltd, operator of China’s biggest online chat service, rose 5.2% in Hong Kong amid analyst predictions the company will report higher earnings on Wednesday.
The MSCI Asia Pacific Index rose 0.7% to 112.50 at 7.22pm in Tokyo. The gauge has gained 59% from a five-year low on 9 March on speculation of a global economic recovery.
Stocks in the measure are valued at an average 24 times estimated profit, higher than the MSCI World Index’s 17 times.
“Investor sentiment remains resilient with the global economy and company earnings on the mend,” said Yoshinori Nagano, a strategist at Tokyo-based Daiwa Asset Management Co. Ltd, which oversees the equivalent of $89 billion (Rs4.26 trillion).
Japan’s Nikkei 225 Stock Average added 0.6%, while Hong Kong’s Hang Seng Index advanced 0.7%. The Taiex Index gained 0.4% in Taiwan, where as many as 500 people are feared dead after a typhoon caused a mudslide.
The Shanghai Composite Index added 0.5% as the statistics bureau said the nation’s retail sales expanded.
Futures on the Standard and Poor’s (S&P) 500 Index lost 0.1%. US stocks fell on Monday, led by commodity producers and retailers, after four straight weeks of gains left the S&P 500 trading at the highest level relative to earnings since 2004.
The US gauge had declined 0.3% on Monday.
The earthquake hit 23km below the seabed 170km from Tokyo at 5.07am local time, shaking buildings in the capital, the Japan Meteorological Agency said on its website.
“Speculators are buying earthquake-related shares for quick returns,” said Masayoshi Yano, an analyst at Tokyo-based Meiwa Securities Co. Ltd.
One-third of the 443 firms in the MSCI Asia Pacific Index that have reported quarterly results so far have beaten analysts’ profit estimates, while 16% have missed, according to data compiled by Bloomberg.
Better-than-expected earnings and economic reports worldwide have driven stocks higher since March, lifting the average valuation of the MSCI Asia Pacific’s companies to a four-month high of 25 times estimated profit on 28 July.
Data last week showed Australian employers unexpectedly added jobs and pointed to improving manufacturing industries in China, Europe and the US.
The MSCI Asia Pacific’s 14-day relative strength index, which measures how rapidly prices have risen or fallen, rose to 67 on Tuesday, three points below the threshold some investors use as a signal to sell.
Kotaro Tsunetomi and Akiko Ikeda in Tokyo contributed to this story.