BackAsian stocks rise, posting 10th advance in 11 weeks on earnings
MSCI Asia Pacific Index gained 0.2% to 148.71, posting its highest close since June 2008 and a 1.3% advance this week
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Singapore: Asian stocks rose, with the regional benchmark index posting its 10th advance in 11 weeks, as earnings from companies including Fanuc Corp. boosted sentiment.
Fanuc jumped 5.3% after the Japanese maker of industrial robots reported quarterly profit that beat analyst estimates. Itochu Corp. rose 2.5% after Japan’s third-largest trading company announced a share buyback. Treasury Wine Estates Ltd, owner of the Penfolds label, slipped 1.8% in Sydney after Credit Suisse Group AG said a proposed transaction with KKR & Co. is unlikely.
The MSCI Asia Pacific Index gained 0.2% to 148.71 as of 6.44pm in Hong Kong. The measure posted its highest close since June 2008 and a 1.3% advance this week. The Standard & Poor’s 500 Index closed at a record on Thursday as a raft of better-than-estimated earnings in the US and signs of global manufacturing growth buoyed sentiment.
“While valuations aren’t stretched, there will be limitations as to how far this rally can go," said Matthew Sherwood, head of investment markets research at Perpetual Ltd in Sydney, which manages about $29 billion. “Whenever a downward draft comes into the market, it’s likely to prove short-lived on the back of continued monetary support, valuations and an improving growth environment."
Japan’s Topix index climbed 0.9%. The nation’s consumer prices excluding fresh food rose 3.3% from a year earlier after a 3.4% gain in May, the statistics bureau said on Friday in Tokyo. The increase matched the projection in a Bloomberg survey of 32 economists.
Mobius bullish
China’s Shanghai Composite Index rose 1% to the highest close since 14 April. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong, also known as the H-share index, increased 0.5%, while the city’s benchmark Hang Seng Index added 0.3%.
The H-share index may climb another 20%, Mark Mobius, the executive chairman of Templeton Emerging Markets Group, said Thursday. Mobius, whose $12 billion Templeton Asian Growth Fund has outperformed 94% of peers this year, favours state-owned banks and energy companies because of their cheap valuations and the government’s plans to open up state-dominated industries.
South Korea’s Kospi index and New Zealand’s NZX 50 Index each advanced 0.4%. Australia’s S&P/ASX 200 Index lost 0.1%. Singapore’s Straits Times Index slipped 0.1%, while Taiwan’s Taiex index dropped 0.9%. India’s S&P BSE Sensex Index lost 0.6%.
IMF forecast
The International Monetary Fund (IMF) lowered its outlook for global growth this year as expansions weaken from China to the US and military conflicts raise the risk of a surge in oil prices. The world economy will advance 3.4% in 2014, the IMF said, less than its 3.6% prediction in April and stronger than last year’s 3.2%. Growth next year will be 4%, compared with an April forecast for 3.9%, the fund said.
China’s economy is seen expanding 7.4% this year, less than the 7.5% forecast in April, the IMF said. Next year, growth in the world’s second-largest economy with slow to 7.1%, the Washington-based fund said, less than its forecast in April for 7.3%.
The IMF report reflected a world rattled by geopolitical risks that have risen since April, including the potential for sharply higher oil prices because of recent Middle East unrest.
Relative value
The MSCI Asia Pacific Index traded at 13.6 times estimated earnings compared with 16.6 for the S&P 500, according to data compiled by Bloomberg.
Futures on the S&P 500 were little changed on Friday. The US equity benchmark index gained 0.1% on Thursday to a record as Facebook Inc. rallied on higher revenue and growth in global manufacturing offset a drop in home sales.
Fanuc advanced 5.3% to 18,390 yen in Tokyo after posting a 99% gain in first-quarter net income to 45.2 billion yen ($444 million), beating analyst estimates for 41.3 billion yen.
Of the companies that reported quarterly earnings since the beginning of the month and for which estimates are available, 58% have exceeded expectations, according to data compiled by Bloomberg.
Kia Motors Corp. gained 1.6% to 56,800 won in Seoul after South Korea’s second-largest car maker reported second-quarter profit that beat analyst estimates.
Itochu, Advantest
Itochu added 2.5% to 1,348 yen after saying it will spend as much as 110 billion yen to buy back shares. Japan’s third-largest trading company also agreed a business tie-up with Thai agriculture group Charoen Pokphand to expand food supply in the world’s most populous region.
Among shares that fell, Advantest Corp., a maker of chip- testing equipment, plunged 6.7% to 1,151 yen after posting profit that missed estimates.
Treasury Wine Estates slipped 1.8% to A$4.99. Credit Suisse lowered its share-price forecast by 33% to A$3.15 and reiterated its underperform rating, saying a deal with KKR is unlikely. Bloomberg
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