Asia Stocks Gain First Day in Three on U.S. Home Building

By Adam Haigh & Satoshi Kawano 

Asian stocks advanced for the first time in three days as new-home construction in the U.S. jumped more than forecast, the International Monetary Fund raised its forecast for Japanese growth and the yen weakened

Toyota Motor Corp., the world’s largest carmaker, advanced 1.5 percent as a weakening yen boosted the earnings outlook for exporters. Advantest Corp. paced increases in Tokyo among makers of semiconductor equipment after Intel Corp. (INTC) forecast second- quarter sales that would exceed some analysts’ estimates. Samsung Engineering Co. (028050) fell 5.2 percent after the South Korean builder reported an unexpected loss. The MSCI Asia Pacific Index (MXAP) gained 0.5 percent to 137.10 as of 12:19 p.m. in Tokyo. Three shares advanced for every two that fell, with seven of the 10 industry groups on the gauge climbing. The benchmark rose 5.5 percent this year through yesterday amid signs the U.S. economy is recovering and as Japanese stocks rallied on speculation the Bank of Japan will boost stimulus.

“U.S. housing starts showed a bright spot and confirmed the view that the economy is on the mend,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The yen will stay in a downtrend given the bold monetary easing by the Bank of Japan, and that leads to optimism exporters’ earnings will outperform.”

Plans for fiscal stimulus and record monetary policy easing by the Bank of Japan were reflected in the IMF’s increased growth estimates for the world’s third-biggest economy, which were raised to 1.6 percent this year from 1.2 percent and to 1.4 percent in 2014 from 0.7 percent. IMF Chief Economist Olivier Blanchard said the BOJ’s action was “appropriate” and its impact on the yen “a logical consequence.”

Exporters Rise

Japanese exporters rallied. Toyota Motor gained 1.5 percent to 5,530 yen, Nissan Motor Co. advanced 2.8 percent to 1,019 yen and Honda Motor Co. added 1.6 percent to 3,880 yen.

Japan’s Nikkei 225 Stock Average (NKY) gained 1 percent, rebounding from the longest losing streak in three months. New Zealand’s NZX 50 Index and Australia’s S&P/ASX 200 Index both advanced 0.9 percent. Singapore’s Straits Times Index added 0.3 percent and Taiwan’s Taiex climbed 0.1 percent. Hong Kong’s Hang Seng Index rose 0.1 percent and China’s Shanghai Composite declined 0.4 percent.

Investors are the most bullish on Japanese stocks for more than six years, while they are selling euro-area equities amid renewed concern about the region’s debt crisis, a Bank of America Corp. survey of global money managers who oversee about $578 billion showed yesterday.

U.S. Futures

This year’s gains on the MSCI Asia Pacific index left the gauge trading yesterday at 14.3 times average estimated earnings compared with 14.2 for the Standard & Poor’s 500 Index (SPX)and 12.5 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index fell 0.2 percent. The measure climbed 1.4 percent yesterday, rebounding from its biggest drop since November, as housing starts and earnings from Coca-Cola Co. to Johnson & Johnson topped estimates.

New-home construction in jumped more than forecast in March, according to Commerce Department figures. Another report showed the cost of living in the U.S. declined in March for the first time in four months as cheaper gasoline and clothing kept inflation in check. Factory production unexpectedly dropped, adding to recent signs that manufacturing is cooling.

South Korea

South Korea’s Kospi index lost 0.1 percent, reversing a gain of as much as 0.7 percent. South Korea’s biggest investors are buying more equities than ever at a time of worsening relations with North Korea, lured by the cheapest shares since 2007. Domestic institutions bought a net 2.2 trillion won ($1.97 billion) of stocks in the two weeks after North Korea announced its highest combat level on March 26, the first among escalating threats from Kim Jong Un’s regime.

Samsung Engineering lost 5.2 percent to 87,200 won in Seoul. Analysts at banks from Credit Suisse Group AG to JPMorgan Chase & Co. downgraded recommendations on the shares after the builder reported a 219.8 billion won ($197 million) first- quarter operating loss. That missed the 155 billion won average forecast for operating profit from analysts.

Advantest added 3.1 percent to 1,380 yen and Nikon Corp. gained 0.2 percent to 2,155 yen in Tokyo. Santa Clara, California-based Intel, the world’s biggest semiconductor maker, said yesterday revenue in the current period will be as much as $13.4 billion. Analysts on average had predicted sales of $12.8 billion, according to data compiled by Bloomberg.

Nomura Holdings Inc. (8604), Japan’s largest brokerage, sank 1.2 percent to 763 yen, paring this year’s surge to 52 percent. Prosecutors in Italy are seeking to seize 1.8 billion euros ($2.4 billion) of assets from Nomura as part of an investigation into Banca Monte dei Paschi di Siena SpA’s use of derivatives to hide losses.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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