Saturday, February 19, 2011

Asian Stocks Rebound on Economic Outlook From Japan, U.S., Profit Growth

Asian stocks rebounded this week after U.S. and Japanese central banks raised their growth outlooks and companies posted better-than-estimated earnings, boosting confidence in the global recovery.

Toshiba Corp. and Elpida Memory Inc. rallied more than 3 percent in Tokyo after Dell Inc., the world’s third-largest personal-computer maker, reported profit that topped forecasts. Qantas Airways Ltd. jumped 6.3 percent after Australia’s biggest airline quadrupled net income. AMP Ltd. rose 4.3 percent as Goldman Sachs Group Inc. recommended the asset manager citing “solid” earnings results.

The MSCI Asia Pacific Index climbed 3 percent to 139.85 in the past five days, led by gains in energy, technology and finance shares. The index last week dropped by the most since August as China raised borrowing costs and anti-government protests intensified in Egypt, eventually forcing President Hosni Mubarak to resign.

“Economic sentiment is improving and that is supporting the stock market,” said Tokyo-based Mitsushige Akino, who oversees about $450 million at Ichiyoshi Investment Management Co. “Investors expecting stocks to rise further are increasing” because of positive economic data and strong earnings.

Federal Reserve policy makers also took a more optimistic view this week, raising their 2011 gross domestic product forecasts as they pressed forward with an expansion of record monetary stimulus.

Bank of Japan

The Bank of Japan raised its economic assessment of the country for the first time in nine months as GDP shrank less than estimated. This prompted Nomura Holdings Inc. to lift its growth outlook saying it now expects the economy “to emerge from its lull sooner than previously thought.”

The benchmark Nikkei 225 Stock Average gained 2.2 percent this week, while Australia’s S&P/ASX 200 Index increased 1.1 percent. Taiwan Taiex jumped 2.7 percent after the island’s economy also recorded better-than-estimated GDP numbers in the fourth quarter.

In China, the Shanghai Composite Index increased 2.7 percent and Hong Kong’s Hang Seng Index rose 3.3 percent. Gains were limited after data showed the Chinese inflation rate exceeded the government’s target for a fourth month.

Toshiba jumped 5.7 percent to 538 yen in Tokyo as U.S. rival Dell reported fourth-quarter results. Elpida, Japan’s biggest maker of computer memory chips, increased 3.5 percent to 1,286 yen.

Toshiba, the world’s second-biggest maker of flash memory, also rose this week after analysts at Nikko Cordial Securities Inc. and CLSA Asia-Pacific Markets recommended the shares.

Qantas Shares

Qantas surged 6.3 percent to A$2.54 after the airline reported a jump in first half net profit to A$241 million ($242 million). The company said earnings for the full year will be “materially stronger” without providing a specific forecast. The airline also predicted a pickup in business travel.

AMP climbed 4.3 percent to A$5.60 after Goldman Sachs upgraded Australia’s second-largest asset manager to “buy” from “hold.” The company this week reported second-half profit of A$350 million.

Santos Ltd. gained 3.2 percent to A$14.24. The oil and gas producer reported a 15 percent increase in full-year net income and said new projects starting output this year may increase production by 20 percent.

Of the 464 companies in the MSCI Asia Pacific Index that have reported results since Jan. 1 for the latest quarter, 181 have exceeded analysts’ estimates, while 143 have missed them, according to data compiled by Bloomberg.

Decision Making

Toyota Motor Corp. also advanced this week, climbing 2.9 percent to 3,885 yen. The carmaker is planning to cut its board to at least 17 members from the current 27 to improve decision making after a series of product recalls, according to two people familiar with the plans. It would be the biggest management reorganization in eight years.

Source: http://www.bloomberg.com

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