Asia Stocks Near Two-Year High as Investors Weigh Profit Reports

By Yoshiaki Nohara

Asian stocks rose, with the regional benchmark index touching the highest intraday level since May 2011, as investors weighed earnings reports and energy shares led gains.

China Petroleum & Chemical Corp., the nation’s largest refiner, increased 1.4 percent after Morgan Stanley said China’s cut in fuel prices will benefit the company. Nidec Corp., the world’s largest maker of hard-disk drive motors, gained more than 6 percent for a second day in Osaka, Japan, after fiscal- year net income beat forecasts. Canon Inc. (7751), the world’s biggest camera maker, slid 6 percent after its income forecast missed analysts’ estimates on slumping demand for compact models. The MSCI Asia Pacific Index added 0.3 percent to 139.36 at 11:38 a.m. in Tokyo, with about the same number of companies falling and rising. The gauge is headed for its highest close since May 3, 2011.

“We have to look at earnings and wait to see if the first- quarter earnings are really good or bad,” said Grace Tam, Hong Kong-based global market strategist at JPMorgan Asset Management Ltd., which oversees about $1.3 trillion globally. “So far, it’s not really been impressive. In Asia, we don’t have an inflation threat. Inflation has been pretty benign and this is a positive factor for Asian equities because Asian economies are net importers of oil.”

The MSCI Asia Pacific Index gained 7.4 percent this year through yesterday amid optimismJapan will deploy more measures to beat deflation and that policy makers in the U.S. and China remain on standby to support growth. The Asian benchmark traded at 14.1 times estimated earnings yesterday, compared with 14.3 times for the S&P 500 and 12.8 times for the Stoxx Europe 600 Index.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average climbed 0.1 percent after slipping 0.1 percent, while the broader Topix Index added 0.3 percent, as data showed foreign investors were net sellers of the nation’s equities last week. The Kospi Index (KOSPI) increased 0.4 percent as South Korea’s economy grew the most in two years in the first quarter. Markets in Australia and New Zealand are closed for a public holiday.

Hong Kong’s Hang Seng Index (HSI) climbed 0.4 percent and China’s Shanghai Composite Index retreated 0.7 percent. Taiwan’s Taiex Index slid 0.1 percent.

More than 60 companies on the MSCI gauge are scheduled to report earnings today, according to data compiled by Bloomberg. Of the 69 firms which have reported quarterly results since April 1, and for which Bloomberg has estimates, 51 percent have exceeded profit forecasts.

Investors are weighing how the yen’s decline will improve the earnings outlook for Japanese exporters.

The yen has declined against all of its 16 major counterparts since April 4, when the Bank of Japan (8301) said it will double the amount of money circulating in the economy by the end of 2014 by buying government bonds, its boldest round of quantitative easing. The BOJ will convene tomorrow.

“The market has yet to show a definitive direction as investors wait for catalysts,” said Toshihiko Matsuno, a strategist at Tokyo-based SMBC Friend Securities Co., a unit of Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest lender by market value. “A weaker yen is helping Japanese companies, but you need to look at each stock to figure out if the yen’s drop is coming on top of a company’s solid business or it’s being overshadowed by poor performance.”

Futures on the Standard & Poor’s 500 Index (SPXL1) were little changed today. The index rose just 0.01 point yesterday in New York, as investors weighed quarterly earnings.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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