Asian Stocks Climb Third Day After China Trade Report

By Adam Haigh 

Asian stocks rose for a third day, with the regional index heading for the highest closing level in five years, as Chinese imports and exports topped estimates and optimism grew that central-bank stimulus will boost profits.

Komatsu Ltd. (6301), the world’s second-biggest maker of construction and mining equipment, advanced 4.3 percent in Tokyo, leading industrial companies higher. Wilmar International Ltd. (WIL), the No. 1 palm-oil processor, climbed 4.2 percent in Singapore as first-quarter profit surged 23 percent. Toshiba Corp. (6502) slumped 4.3 percent in Tokyo after the Nikkei newspaper reported sales at the No. 2 maker of flash-memory will miss the company’s forecast.

The MSCI Asia Pacific Index climbed 0.9 percent to 143.34 as of 12:36 p.m. in Tokyo, with all 10 industry groups on the gauge rising. The measure rose 9.8 percent this year through yesterday amid speculation the Bank of Japan will deploy more measures to beat deflation and policy makers in the U.S. and Europe remain on standby to buoy growth.

“Markets are being driven by heightened stimulus,” said Matthew Sherwood, Sydney-based head of investment market research at Perpetual Ltd., which manages about $25 billion. “Economic data remains in the Goldilocks range -- weak enough to warrant continued stimulus, but strong enough to keep earnings expectations positive.”

Regional Gauges

Australia’s S&P/ASX 200 Index (AS51) gained 0.8 percent to trade near the highest level in five years. South Korea’s Kospi index rose 0.2 percent and New Zealand’s NZX 50 Index added 0.4 percent. Singapore’s Straits Times Index jumped 0.8 percent and Taiwan’s Taiex Index climbed 1 percent. Hong Kong’s Hang Seng Index gained 0.6 percent and China’s Shanghai Composite increased 0.2 percent.

Japan’s Nikkei 225 Stock Average climbed 1.4 percent, with trading volume 6.4 percent below its 30-day average for the time of day. The broader Topix Index jumped 1.1 percent, to a 4 1/2 year high and a level not seen since before Lehman Brothers Holdings Inc. filed for bankruptcy protection on Sept. 15, 2008. Komatsu advanced 4.3 percent to 2,725 yen, leading a gauge of industrial companies on the regional benchmark to a 1.8 percent advance, the most among the 10 groups.

Investors are betting Australia’s central bank will cut interest rates again as early as July after it reduced the benchmark to a record low yesterday and signaled that cooling inflation and a strong currency give it room to ease policy. Swaps contracts indicate a better than 50 percent chance Reserve Bank Governor Glenn Stevens will lower the 2.75 percent benchmark in July and 76 percent odds by September, data compiled by Bloomberg show.

China Trade

Reserve Bank of New Zealand Governor Graeme Wheeler said in Wellington today he has scope to cut interest rates. European Central Bank President Mario Draghi said May 6 that policy makers are ready to cut borrowing costs again if needed after reducing them to a record low last week.

China’s exports rose 14.7 percent in April, topping the 9.2 percent increase estimated by analysts surveyed by Bloomberg. Imports climbed 16.8 percent in April, beating the 13 percent forecast.

The MSCI Asia Pacific yesterday traded at 14.3 times average estimated earnings compared with 14.7 for the Standard & Poor’s 500 Index (SPX) and 13.2 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge yesterday added 0.5 percent to 1,625.96, a record close.

Company Profits

Of the 162 companies on the Asia-Pacific gauge that have reported quarterly earnings since the start of April, and for which Bloomberg has estimates, 59 percent have missed projections, according to data compiled by Bloomberg.

Wilmar rose 4.2 percent to S$3.45. Net income was $315.4 million in the three months ended March 31, beating the $296.5 million average estimate of three analysts surveyed by Bloomberg.

HSBC Holdings Plc (5), Europe’s biggest lender, gained 1.5 percent to HK$87.45 in Hong Kong after posting a bigger-than- estimated increase in first-quarter profit as provisions for bad loans shrank, stirring speculation the lender may step up its cost-reduction targets.

Toshiba sank 4.3 percent to 516 yen in Tokyo as the Nikkei newspaper reported a weaker yen boosted costs, causing the maker of memory chips, televisions and nuclear reactors to miss its profit forecast.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

source

please give me comments thanks