Asian stocks rally as confidence returns

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Advertisement

This was published 14 years ago

Asian stocks rally as confidence returns

Asian stocks rose, lifting the MSCI Asia Pacific Index from an eight-week low, as Posco raised its production target and Singapore upgraded its forecast for economic growth.

Posco, South Korea's largest steelmaker, climbed 3.5 per cent in Seoul after saying 2009 output may be 6.4 per cent higher than forecast. Komatsu Ltd., the world's No. 2 maker of earthmoving equipment, surged 6.3 per cent after the Nikkei English News said the company probably posted an operating profit in the April-June quarter. DBS Group Holdings, Southeast Asia's biggest bank, gained 2.5 per cent in Singapore.

The MSCI Asia Pacific Index rose 1.9 per cent to 99.90 in Tokyo after yesterday closing at its lowest level since May 18. The index had rallied 42 per cent from a more than five-year low on March 9 on optimism stimulus policies around the world will revive the global economy.

``The recovery is gaining traction,'' said Nader Naeimi, a strategist at AMP Capital Investors in Sydney. ``Even if we don't see spectacular growth, a stabilization should be enough to support a market rally.''

Japan's Nikkei 225 Stock Average rose 2.6 per cent, with NEC Electronics surging 10 per cent after the Nikkei said the company will boost production. Kirin Holdings gained 1.9 per cent after confirming it's in merger talks with Suntory Holdings.

Singapore's Straits Times Index gained 2.2 per cent. The S&P/ASX 200 Index in Australia climbed 2.6 per cent, led by mining company BHP Billiton, which jumped 3.9 per cent as coal shipments from the country's Newcastle port climbed.

Futures on the Standard & Poor's 500 Index were little changed. The gauge rallied 2.5 per cent yesterday, led by finance shares after analyst Meredith Whitney said US bank stocks will likely rise 15 per cent. She recommended investors buy Goldman Sachs Group.

Raw material producers accounted for 15 per cent of the MSCI Asia Pacific Index's advance today. Posco climbed 3.5 per cent to 445,000 won. The company announced its new production target after the market closed yesterday as it reported second-quarter profit that beat analyst estimates.

Komatsu rose 6.3 per cent to 1,377 yen. The company will likely report about 5 billion yen ($70 million) in operating profit for the three months to June, recovering from a loss in the previous quarter, the Nikkei newspaper reported. Demand in emerging markets, including China, and cost cuts contributed to earnings, the newspaper said.

Advertisement

``Stimulus measures will soon start to take effect in emerging countries such as China and India, and people are snapping up companies that will benefit from their revival,'' said Yoshihiro Ito, senior strategist at Okasan Asset Management.

Chinese stocks are among the world's best investments because the nation's economic growth is poised to exceed forecasts, according to Barton Biggs, who runs New York-based hedge fund Traxis Partners LP. The Shanghai Composite Index added 1.4 per cent today.

NEC Electronics, Japan's fourth-largest chipmaker, surged 10 per cent to 818 yen after the Nikkei reported the company will bolster use of its plant in Kumamoto prefecture, southwestern Japan, to about 70 per cent.

Kirin, Japan's largest drinks maker, added 1.9 per cent to 1,419 yen. The stock extended yesterday's 7.8 per cent surge after the Nikkei newspaper reported Kirin and closely held Suntory were discussing a merger.

The companies are in the ``early stage'' of discussions and no decision has been made, Kirin said in a statement to Tokyo's Stock Exchange today.

In Singapore, DBS gained 2.5 per cent to $S11.70. CapitaLand Ltd., the city's biggest developer, rose 2.4 per cent to $S3.39.

Singapore's gross domestic product will shrink between 4 per cent and 6 per cent this year, less than an earlier forecast for a contraction of as much as 9 per cent, the trade ministry said today. The economy grew an annualized 20.4 per cent last quarter from the previous three months, after declining a revised 12.7 per cent between January and March, it said.

``Early signs of a global recovery have now emerged,'' Alan Bollard, governor of the New Zealand central bank said today. Australian business sentiment turned positive in June for the first time since December 2007, a National Australia Bank index released today showed.

The stock rally since March has lifted the average valuation of companies on the MSCI Asia Pacific Index to 41 times reported profit, more than double the 15 times stocks were trading at during the market's trough that month.

``Today's gains might still be a bit short-lived,'' said Steven Leung, a Hong Kong-based director of institutional sales at UOB-Kay Hian Ltd. ``People have been getting more cautious as valuations aren't as attractive as a couple of months ago. Most of my institutional clients have a very high level of cash in hand.''

Melbourne-based BHP jumped 3.9 per cent to $33.47, while Rio Tinto Group added 3.2 per cent to $48.11. The companies are among those that ship coal through Newcastle, the world's biggest export harbor for the fuel.

Coal shipments from the port gained 11 per cent last week while the number of vessels waiting to load decreased, Newcastle Port Corp. said on its Web site.

Mitsubishi Corp., which operates an alliance with BHP that is the world's biggest exporter of coking coal, climbed 4.4 per cent to 1,631 yen in Tokyo.

Bloomberg News

Most Viewed in Business

Loading