Barefoot Investor: Asian Stocks Rise a Second Day as Japan Exports Increase, Commodities Gain

Asian stocks climbed for a second day as reports showing better-than-estimated exports from Japan and China’s manufacturing expanding for the first time in three months tempered concern that Europe won’t provide a solution to the debt crisis threatening the global economy.

Honda Motor Co., a Japanese carmaker that gets over 80 percent of sales overseas, rose 1.7 percent in Tokyo. Industrial & Commercial Bank of China (1398) Ltd. led Chinese lenders higher after Barclays Plc said the banks will post “strong” third quarter earnings. BHP Billiton Ltd. (BHP), the largest global mining company, advanced 2.7 percent in Sydney after copper futures extended gains.

The MSCI Asia Pacific Index increased 1.9 percent to 118.61 as of 12:45 p.m. in Tokyo, even after European leaders meeting in Brussels yesterday ruled out tapping the central bank’s balance sheet to boost a regional rescue fund. The gauge of Asian stocks last week had its biggest weekly decline in a month after Germany said there would be no quick fix to the crisis.

“Economic expectations got so depressed during the September market rout that any signs of improvement in the economic outlook should have a positive effect on the market,” Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., said by telephone. “There was no clear sign of division among European leaders, but there is also some disappointment that nothing concrete was announced.”

Nikkei 225 (NKY), Hang Seng

Japan’s Nikkei 225 Stock Average gained 1.7 percent. South Korea’s Kospi Index climbed 2.7 percent and Australia’s S&P/ASX 200 rose 2.7 percent. Hong Kong’s Hang Seng Index jumped 3.5 percent.

China’s Shanghai Composite Index added 0.4 percent, paring gains of as much as 0.7 percent, after Premier Wen Jiabao said the government would continue to maintain tight monetary policies to control soaring inflation and as a report showed China’s manufacturing may expand in October for the first time in three months.

Futures on the fStandard & Poor’s 500 Index rose 0.3 percent today after the European summit at the weekend. The gauge climbed 1.9 percent on Oct. 21, capping its longest weekly rally since February, as European governments considered deploying $1.3 trillion in funds to tame the crisis.

European leaders in Brussels yesterday outlined plans to aid banks, heading toward a revamped strategy to contain the debt crisis. The 13th crisis-management summit in 21 months excluded a forced restructuring of Greece’s debt, sticking with the policy of enticing bondholders to accept “voluntary” losses to help restore the country’s finances. The complete blueprint will be formed Oct. 26.
Withstanding Slump

Japanese exporters climbed after a report showed the nation’s shipments increased more than expected in September as demand for cars and auto parts rose, a sign the recovery in shipments is withstanding a weakening global economy.

Honda Motor advanced 1.7 percent to 2,335 yen. Toyota Motor Corp. (7203), Japan’s biggest carmaker by sales, rose 1.1 percent to 2,574 yen and Suzuki Motor Corp. (7269), Japan’s No. 4 automaker by sales, climbed 2.4 percent to 1,678 yen.

Bridgestone Corp., a tiremaker, jumped 4.1 percent to 1,765 yen. The company aims to boost annual sales to 3.6 trillion yen by 2012 as it plans to expand production in China to meet rising demand, Chief Financial Officer Akihiro Eto said on Oct. 21.

Chinese banks rallied after Barclays said the Hong Kong- listed lenders may post 32 percent profit growth on average in the third quarter. Industrial & Commercial Bank of China surged 4.6 percent to HK$4.34. China Construction Bank Corp., the nation’s second-biggest lender, climbed 2.9 percent to HK$5.27. Bank of China Ltd. increased 3.4 percent to HK$2.74.
‘Too Bearish’

“We believe the current share prices may reflect too bearish a scenario for asset quality deterioration,” Barclays analysts May Yan and Shujin Chen wrote in a report today. “Negative news flow may have peaked.”

China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009, after a preliminary index of purchasing managers showed a rebound in new orders and output.

The reading of 51.1 for the index released by HSBC Holdings Plc and Markit Economics today was the highest in five months and compares with the final reading of 49.9 for September and August. A reading above 50 indicates expansion.

Raw material producers advanced as copper and oil futures extended gains. BHP Billiton gained 2.7 percent to A$36.65 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, jumped 4.8 percent to A$65.59. Inpex Corp. (1605), Japan’s biggest energy explorer, increased 2.6 percent to 516,000 yen in Tokyo.

The MSCI Asia Pacific Index declined 16 percent this year through Oct. 21, compared with a 1.5 percent drop by the S&P 500 and a 13 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.8 times estimated earnings on average, compared with 12.5 times for the S&P 500 and 10.3 times for the Stoxx 600. (Bloomberg)


nadeemalim said... @ October 27, 2011 at 6:57 AM

Japan's economic strength is due to its huge automotive manufacturing industry and as you have suggested I think China will also continue to grow economically due to its electronic manufacturing. I live in the United States and so many products I see in electronics stores are manufactured in China now. Not to mention all those Chinese products people in the USA are buying through eBay!

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