Asian Stocks Advance on Chinese Manufacturing, Currency Pool

May 4 (Bloomberg) -- Asian stocks advanced, led by finance and technology companies, as manufacturing in China expanded for the first time in nine months and regional leaders pledged to start a $120 billion foreign-currency reserve pool.

China Mobile Ltd. climbed 6.8 percent in Hong Kong, and KB Financial Group Inc., owner of South Korea’s largest bank, rose 15 percent after Goldman Sachs Group Inc. advised investors to buy both stocks. Taiwan Semiconductor Manufacturing Co. gained 6.9 percent on a better-than-estimated sales forecast. Stocks also gained as the U.S. said swine flu has milder symptoms than the world’s previous influenza outbreaks.

“Investors who have been on the sidelines are slowly plowing back funds into equities, fearing they might miss the rally,” said John Koh, who helps oversee $1.1 billion at MEAG Hong Kong Ltd. “The swine flu outbreak is a concern but everyone seems well-prepared to contain it.”

The MSCI Asia Pacific excluding Japan Index jumped 4.8 percent to 294.70 as of 2:52 p.m. in Hong Kong. The gauge has gained 19 percent this year amid speculation the worst of the global recession is over. Japan’s stock market is closed for a three-day holiday. It sank by a record 53 percent last year.

Australia’s S&P/ASX 200 Index gained 3 percent. Hong Kong’s Hang Seng Index climbed 4.9 percent even as a 25-year-old Mexican was confirmed as the city’s first swine flu patient. Taiwan’s Taiex index jumped 5.6 percent after Goldman Sachs raised its recommendation on the island’s equities to “overweight.” All markets in Asia advanced.

Raising Capital

China Airlines Ltd., Taiwan’s largest carrier, gained 3.9 percent after a report said that the island may seek additional flights to mainland China. Rio Tinto Group, the world’s third- biggest mining company, climbed 4.9 percent in Sydney after Aluminum Corp. of China said it’s pressing ahead with its investment in Rio. Doosan Infracore Co., South Korea’s biggest construction-equipment maker, climbed 6.4 percent after BNP Paribas SA advised investors to buy the stock.

U.S. Standard & Poor’s 500 Index futures added 0.6 percent. The gauge rose 0.5 percent on May 1 after better-than-expected reports on consumer confidence and manufacturing. Governments worldwide from the U.S. to Japan have been widening measures to ease the worst global recession since World War II.

The Association of Southeast Asian Nations, together with Japan, China and South Korea, said they will start a $120 billion foreign-currency reserve pool by the end of the year to help revive investor confidence. The pledge was agreed upon at a weekend meeting in Bali, Indonesia.

‘Very Positive’

“It’s not so much the amounts of money being put in, but the concept of these countries getting together and cooperating,” Mark Mobius, who helps oversee $20 billion in emerging-market assets at Templeton Asset Management Ltd., said in an interview yesterday. “That’s a very positive development.”

Indonesian Finance Minister Sri Mulyani Indrawati also said at the weekend that the region was equipped to “respond positively” to swine flu. The World Health Organization as of yesterday had confirmed 898 human cases of the virus. The fact that fewer people were being killed than previous flu outbreaks is “encouraging,” Richard Besser, acting chief of the U.S. Centers for Disease Control and Prevention, told ABC News.

China Mobile, the world’s largest cell-phone operator by users, climbed 6.8 percent to HK$71.90 after it was raised to “buy” from “neutral” at Goldman Sachs, which said valuations for the stock are attractive. Goldman Sachs added China Mobile to its Asia Pacific “conviction buy” list and raised its share-price estimate by 16 percent to HK$79.

Brokerage Upgrades

In Shanghai, Baoshan Iron & Steel Co., China’s biggest steelmaker, rose 4.3 percent to 6.03 yuan. Angang Steel Co., China’s second-largest steelmaker by market value, advanced 8.1 percent to 9.39 yuan.

A China purchasing manager’s index rose to a seasonally adjusted 53.5 in April from 52.4 in March, according to a May 1 statement from the Federation of Logistics and Purchasing. A reading above 50 indicates an expansion.

KB Financial surged 15 percent to 45,700 won in Seoul. Goldman Sachs raised its recommendation to “buy” from “neutral,” saying in a report that margins may start to improve. The brokerage lifted its share-price estimate by 67 percent to 50,200 won.

Taiwan Semiconductor, the world’s No. 1 made-to-order chipmaker, jumped 6.9 percent to NT$59. The company said sales this quarter would be NT$71 billion ($2.1 billion) to NT$74 billion, compared with the median of 15 analysts’ estimates for NT$52.4 billion.

Mining Companies Advance

China Airlines advanced 3.9 percent to NT$9.57. President Ma Ying-jeou said the number of direct flights between China and Taiwan should be increased to 540 a week from 270, the Taipei Times reported on May 2. Taiwan stocks also climbed on the upgrade from Goldman Sachs, which said the island may reap benefits from improving ties with China.

Rio Tinto climbed 4.9 percent to A$67.30. Aluminum Corp.’s Vice President Lu Youqing said the company is pressing ahead with its planned $19.5 billion investment in Rio, after the Financial Times said it may be offered less convertible debt.

BHP Billiton Ltd., the world’s biggest mining company, rose 2.5 percent to A$33.82. Crude oil for June delivery rose 4.1 percent to $53.20 a barrel in New York on May 1. In London, copper surged 3.8 percent, zinc 6.3 percent and nickel 1.9 percent.

‘Doomsday Scenario’

PT Bumi Resources, Asia’s biggest exporter of power-station coal, gained 6.6 percent to 1,620 rupiah after saying first- quarter profit rose 21 percent. Doosan climbed 6.4 percent to 19,150 won after BNP raised its recommendation to “buy” from “hold”, citing a positive outlook for excavator sales in China.

“The doomsday scenario is diminishing by the day,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. “The data has become more mixed, and day-by-day people are becoming more relaxed about the outlook. But it’s still too early to say we’ve reached a clearly defined turning point.”