15 Jul 2009
July 15 (Bloomberg) -- Asian stocks gained, lifting the MSCI Asia Pacific Index to a one-week high, after an Intel Corp. sales forecast beat analyst estimates, Air China Ltd. predicted higher profit and a brokerage upgraded China Cosco Holdings Co.Samsung Electronics Co., the world's second-largest maker of semiconductors after Intel, jumped 5.1 percent in Seoul on optimism demand for personal computers is recovering. Intel rose 7.1 percent in extended trading. Air China gained 6.1 percent in Hong Kong, while China Cosco, the world's No. 1 operator of dry- bulk ships, climbed 5.8 percent. Figures from China's government today showed that a decline in foreign direct investment slowed.
"Confidence in the market is returning as economic data have been showing signs of stability and earnings have been positive as well," said Chris Hall, who helps manage $2.4 billion at Argo Investments Ltd. in Adelaide. "The recovery is still fragile. We're still waiting for signs that U.S. consumption is recovering."
The MSCI Asia Pacific Index gained 0.9 percent to 101.37 at 3:19 p.m. in Tokyo, adding to yesterday's 2.5 percent gain. The gauge has rallied 44 percent from a more than five-year low on March 9 amid optimism government stimulus policies will revive the global economy.
South Korea's Kospi Index climbed 2.6 percent, while Hong Kong's Hang Seng Index added 1.6 percent. Tsingtao Brewery Co., China's second-largest beer maker, rose 3.4 percent in Hong Kong after Citigroup Inc. recommended investors "buy" the stock. Rio Tinto Group, the world's No. 3 mining company, rose 2 percent in Sydney on higher metal prices.
Japan's Nikkei 225 Stock Average pared gains after the central bank cut its economic forecasts. Mizuho Financial Group Inc. sank 4 percent as it prepared to set the price for new shares to raise capital.
Retail Sales
The U.S. Standard & Poor's 500 Index added 0.9 percent yesterday as a government report showed retail sales advanced 0.6 percent last month from May, exceeding the 0.4 percent gain projected by economists. Goldman Sachs Group Inc. posted a 65 percent jump in quarterly net income as revenue from trading and stock underwriting reached record highs.
Futures on the S&P 500 climbed 0.9 percent after Intel, the world's largest chipmaker, forecast sales will reach as much as $8.9 billion in the current quarter, surpassing the $7.86 billion estimated by analysts. The report came after U.S. markets closed.
Technology shares accounted for 22 percent of the MSCI Asia Pacific Index's gain today. Advantest Corp., the world's biggest maker of memory-chip testers, rose 1.5 percent in Tokyo to 1,741 yen. Taiwan Semiconductor Manufacturing Co., the world's largest maker of customized chips, added 2.1 percent to NT$53.60.
Intel Results
Samsung Electronics climbed 5.1 percent to 666,000 won. Macquarie Group Ltd. raised its recommendation to "outperform" from "underperform" and lifted its share-price estimate to 840,000 won from 500,000 won.
"Intel's results show that PC demand is not bad," said Lee Jin Woo, a fund manager at KTB Asset Management Co. in Seoul, which manages the equivalent to $7.8 billion in assets. "U.S. retail sales data also boosted confidence. One of the most important things is whether the U.S. consumers will open their wallets."
Stocks on the MSCI Asia Pacific Index are trading at 43 times reported earnings, up from the 15 times stocks were trading at during the market's trough in March. Companies on the S&P 500 are currently at 14 times profit.
Economic Recovery?
Singapore yesterday forecast a narrower contraction in its gross domestic product this year. Australian business sentiment turned positive in June for the first time since December 2007, a National Australia Bank Ltd. index released yesterday showed.
Air China climbed 6.1 percent to HK$4.20. The company said it expects first-half profit to rise more than 50 percent from last year's 1.3 billion yuan ($190 million).
PetroChina Co., China's largest oil producer, gained 1 percent to HK$8.06. The company's refining profit climbed to a record in the first half, parent company China National Petroleum Corp. said in a statement in Beijing today.
China Cosco jumped 5.8 percent to HK$9.43. Shenyin & Wanguo Securities upgraded the stock to "outperform" from "neutral." The stock also rose as the Baltic Dry Index, which measures the cost of shipping commodities, climbed 4.1 percent in London yesterday, snapping a nine-day, 21 percent decline.
Metal Prices
The decline in foreign direct investment in China slowed to 6.8 percent in June from a year earlier, compared with a 17.9 percent slide for the first half, the commerce ministry said today. Economists expect a report tomorrow to show that China's economic growth rebounded to 7.8 percent in the second quarter from 6.1 percent in the previous period.
Rio gained 2 percent to A$50.08 after a gauge of six metals in London gained 3.4 percent, while copper futures added 3.4 percent in New York. Fortescue Metals Group Ltd. added 6.4 percent to A$3.83.
Rio also said today that second-quarter iron-ore output rose 8 percent and that it expects a recovery in steel demand in China to continue this half.
Tsingtao climbed 3.4 percent to HK$27.10, adding to yesterday's 6.7 percent advance. Citigroup raised the stock to "buy" from "sell" after the company said on July 13 that first-half net income increased.
Lower Growth
Japan's Nikkei 225 rose 0.1 percent, after gaining as much as 0.8 percent. The central bank said the country's economy will shrink 3.4 percent in the year ending March 2010, more than the 3.1 percent predicted in April.
The Bank of Japan today extended its emergency-credit programs and left the overnight lending rate at 0.1 percent.
Mizuho Financial sank 4 percent to 190 yen amid plans to raise as much as 655 billion yen ($6.8 billion) from selling shares after local and overseas investments depleted capital. The company said on July 1 that it may set the price for the sale as early as today.
