Wednesday, July 20, 2011

Asian Stocks Rise as U.S. Debt Plan Nears, Apple Profit Spurs Exporters

Asian stocks rose, with the regional benchmark index set to close at its highest level in a week, on optimism U.S. lawmakers are moving toward a deal to help the government avoid a debt default and after Apple Inc. (AAPL)’s profit topped estimates, boosting the earnings outlook for exporters.

Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, climbed 3.5 percent in Seoul. James Hardie Industries SE (JHX), the No. 1 seller of home siding in the U.S., rose 1.8 percent after construction of new homes in the country rose to a five-month high in June. BHP Billiton Ltd. (BHP), the world’s largest mining company, advanced 1.9 percent in Sydney after oil and metal futures increased.

The MSCI Asia Pacific Index increased 1.2 percent to 136.84 as of 7:46 p.m. in Tokyo, headed for its highest close since July 8. About three stocks advanced for each that fell on the gauge. The measure dropped for the first week in four last week after European finance ministers declined to rule out a temporary default for Greece and as Moody’s Investors Service put the U.S. under review for a possible credit-rating downgrade.

“We’ve been hit by a lot of headline risks,” Stephen Wood, New York-based chief market strategist at Russell Investments, said on Bloomberg Television. “That’s being balanced by the fact that earnings are pretty darn good and the economy looks okay. That gives us a reasonably positive outlook for 2011.”

U.S. Debt Deal

Japan’s Nikkei 225 (NKY) Stock Average rose 1.2 percent. South Korea’s Kospi Index gained 1.2 percent. Taiwan’s Taiex Index advanced 2.1 and Australia’s S&P/ASX 200 Index both climbed 1.8 percent. Hong Kong’s Hang Seng Index added 0.5 percent, while China’s Shanghai Composite Index lost 0.1 percent, erasing gains of as much as 0.7 percent.

Futures on the Standard & Poor’s 500 Index advanced 0.6 percent today after Apple reported profit topped estimates on record iPhone and iPad sales. The index rose 1.6 percent to 1,326.73 yesterday as President Barack Obama endorsed a $3.7 trillion debt-cutting plan by a bipartisan group of senators.

U.S. stocks surged as news of the proposal, which would combine tax increases and spending cuts, spurred optimism that lawmakers will reach an agreement that will help the nation avoid default.

A gauge of information technology companies led the advance among the 10 industry groups in the MSCI Asia Pacific Index. California-based Apple, the world’s biggest technology company by market value, reported profit in the third-quarter increased to $7.79 a share from a year earlier, exceeding the $5.87 predicted by analysts on average. Sales climbed 82 percent to $28.6 billion.

Apple Effect
Samsung Electronics, whose smartphones compete with Apple’s iPhones increased 3.5 percent to 851,000 won in Seoul. Hon Hai Precision Industry Co., an assembler of iPhones jumped 4.6 percent to NT$93.2 in Taipei. Wintek Corp. (2384), a supplier of touch sensors for Apple’s iPad, surged 4.8 percent to NT$41.70.

The MSCI Asia Pacific Index erased its loss for the week as companies reported positive earnings. Among the 21 companies in the gauge that posted results since July 11, 13 beat the average analyst profit estimate, data compiled by Bloomberg show.

Sogo Medical Co., which operates pharmacies in Japan and leases medical equipment, climbed 3.6 percent to 2,908 yen in Tokyo, the highest close since January 2009. The company said first-quarter net income more than doubled to 547 million yen ($6.9 million) from 207 million yen a year earlier.

Carbon Fiber
Teijin Ltd. (3401), a fiber maker, gained 0.8 percent to 370 yen. Net income in the three months ended June 30 probably rose 60 percent from a year earlier to about 6.5 billion yen due to increasing shipments of carbon fibers used for in making sporting goods and autoparts, the Nikkei newspaper reported, without saying where it got the information.

Exporters to the U.S. climbed after construction of new homes in the U.S. rose more than forecast in June to the highest level in five months, adding to signs the housing market is stabilizing. Work began on 629,000 houses, a 15 percent increase from May, the Commerce Department reported yesterday. The level of starts exceeded the most optimistic forecast in a Bloomberg News survey of economists. Building permits, a sign of future construction, unexpectedly climbed 2.5 percent.

James Hardie, a supplier of building materials that gets 68 percent of sales in the U.S., rose 1.8 percent to A$5.80 in Sydney. Li & Fung Ltd. (494), the largest supplier of toys and clothes to Target Corp. and Wal-Mart Stores Inc., advanced 1.8 percent to HK$13.72 in Hong Kong. Honda Motor Co., the Japanese carmaker that counts North America as its biggest market, gained 1.3 percent to 3,185 yen in Tokyo.

‘Less Anxious’
“People are feeling less anxious about a default and the economy in the U.S.,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc.

Shares of raw material producers advanced after crude oil and metal futures gained. BHP Billiton climbed 1.9 percent to A$43.44 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, gained 1.5 percent to A$82.55. Inpex Corp. (1605), Japan’s biggest energy explorer, increased 1.9 percent to 600,000 yen in Tokyo.

Crude oil for August delivery climbed 1.6 percent to $97.50 a barrel in New York yesterday, the highest settlement since July 13, amid growing optimism that the economy of the world’s biggest oil-consuming country will grow after the better-than- expected housing starts and earnings reports. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum advanced 1.7 percent.

Nanya, Zijin
Among stocks that declined, Nanya Technology Corp. (2408), Taiwan’s second-largest maker of memory chips, slumped 6.9 percent to low NT$6.62. The company said its second-quarter loss widened to NT$7.9 billion ($274 million) from a loss of NT$1.1 billion a year earlier. That’s more than the average NT$5.3 billion loss estimate by seven analysts compiled by Bloomberg.

Zijin Mining Group Co., China’s biggest gold producer by market value, slumped 5.7 percent to HK$4.28 in Hong Kong, the most in a year. An institutional shareholder is planning to sell 338.4 million shares at a discount range of 4 percent to 7 percent to Zijin’s closing share price of HK$4.54 yesterday, according to a term sheet obtained by Bloomberg News.

The MSCI Asia Pacific Index lost 1.8 percent this year through yesterday, compared with a gain of 5.5 percent by the S&P 500 and a drop of 4.2 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.4 times estimated earnings on average, compared with 13.4 times for the S&P 500 and 10.6 times for the Stoxx 600.

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