Asian stocks advance on China economy data; Japan shares fall

Asian stocks advance on China economy data; Japan shares fall

Tokyo / Sydney: Asian stocks rose and the MSCI Asia Pacific Index had its biggest weekly advance since July after Chinese economic data beat economist estimates. Japanese shares dropped on a worse-than-expected economic growth report.

Poly Real Estate Group Co., China’s second largest developer by market value, advanced 3.7% in Shanghai after government reports showed industrial production and investment growth accelerated. CNOOC Ltd, China’s third biggest oil company, rose 2.2% in Hong Kong as crude oil rose to the highest in more than a week. Dentsu Inc., Japan’s largest advertising agency, dropped 2.7% after the government revised economic growth figures lower and the yen strengthened.

The MSCI Asia Pacific Index added 0.2% to 117.46 as of 5.38pm in Tokyo. It rose 4.1% in five days, the most since the week ended 24 July.

The gauge has surged 60% in the past six months as economies recovered from the first global recession since World War II.

There’s a lot of expectation priced in after the recent rally, said Matt Riordan, who helps manage about $4.1 billion (around Rs19,885 crore) at Paradice Investment Management in Sydney. Still, the economic data globally and earnings have tended to surprise on the upside.

China’s Shanghai Composite Index rose 2.2%, while Hong Kong’s Hang Seng Index added 0.4% after the Chinese statistics bureau said industrial production increased 12.3% in August from a year earlier.

Japan and India were the only Asian markets to drop. The Nikkei 225 Stock Average lost 0.7%.

Futures on the Standard and Poor’s (S&P) 500 Index slipped 0.1%. Treasurys declined, sending the yield on the 10-year note up by 2 basis points, before an industry report that economists predict will show US consumer confidence improved for the first time in three months.

The S&P 500 added 1% on Thursday after the labour department reported the number of Americans filing first-time claims for unemployment benefits dropped more than economists had estimated. Treasury secretary Timothy Geithner also said the government is preparing to withdraw some of its support for financial markets.

China’s Premier Wen Jiabao signalled he will maintain unprecedented government spending because China’s economic rebound is unstable. The Shanghai Composite Index has climbed 64% this year amid surging loan growth.

The climb in August industrial production was higher than the 10.8% increase the previous month and beat the 11.8% estimate of economists surveyed by Bloomberg. Urban fixed-asset investment for the 8 months to 31 August rose 33%. Economists in the survey expected 32.7%.

The MSCI Asia Pacific climbed for a sixth straight month in August, the longest stretch of gains since the 10 months ended July 2007. Stocks on the gauge are priced at an average 1.6 times book value, up from 1 at the index’s low in March, according to Bloomberg data. Greater-than-expected profit reports have fuelled the rally.

Among the 642 companies on the MSCI Asia Pacific Index that reported quarterly net income in the past two months, 35% have beaten analyst estimates, while 21% have missed.

Stocks also fell as the yen strengthened to 91.24 versus the dollar, the highest since February, depressing the local value of Japanese firms’ overseas sales.