Asian Stocks Advance for Third Week as U.S. Hiring, Retail Sales Improve

By Anna Kitanaka - Jul 7, 2011

Asian stocks rose, driving the benchmark index higher for a third week, as increasing U.S. retail sales and employment boosted confidence in the strength of the global economic recovery.

Toyota Motor Corp., the world’s biggest carmaker by market value, rose 1.9 percent in Tokyo. BHP Billiton Ltd., the world’s No. 1 mining company by market value, advanced 1.2 percent after oil prices gained on optimism fuel demand will increase in the U.S. Shinhan Financial Group Co. dropped 3.3 percent in Seoul after a term sheet showed that Korea Deposit Insurance Corp. is selling 2.9 million shares in the company.

The MSCI Asia Pacific Index increased 0.8 percent to 138.38 as of 11:25 a.m. in Tokyo, driving the measure toward a 2.1 percent gain this week, its third consecutive weekly jump. About three shares rose for each that fell on the 1,018-member gauge. All 10 industry groups advanced.

“The global recovery is still on foot,” said Prasad Patkar, who helps manage about $1.7 billion at Platypus Asset Management. “There was a little concern about the U.S. a couple of months ago, but that seems to be working its way through. It looks like there’s a reasonably healthy demand outlook for Asian exporters.”

Japan’s Nikkei 225 (NKY) Stock Average rose 1 percent after the nation’s Finance Ministry said the current-account surplus in May narrowed less than economists forecast. South Korea’s Kospi index rose was little changed in Seoul while Australia’s S&P/ASX 200 Index added 1 percent in Sydney.

U.S. Jobs Grow

Hong Kong’s Hang Seng index increased 1.1 percent, while China’s Shanghai Composite index fell 0.2 percent.

Futures on the Standard & Poor’s 500 Index were unchanged today. The S&P gained 1.1 percent yesterday to close at its highest level since May 10 after a report by ADP Employer Services showed U.S. companies added more jobs than forecast in June.

Consumer discretionary shares, led by Japanese exporters such as Toyota and Honda Motor Co., advanced 1 percent, the second-most among the 10 industry groups on the MSCI Asia Pacific Index.

Toyota, which receives 27 percent of its revenue from North America, rose 1.9 percent to 3,465 yen, the biggest boost to the MSCI Asia Pacific Index. Honda, which counts North America as its largest market, advanced 1.4 percent to 3,260 yen. Canon Inc., the world’s No. 1 camera maker by market value, rose 2 percent to 3,925 yen.
Adding Payrolls

Investor optimism was bolstered after a report that companies in the U.S. added 157,000 workers to their payrolls last month, compared with a 36,000 gain in May, according to ADP Employer Services. The median forecast in a Bloomberg News survey was for 70,000 extra jobs. Also, retail sales reports indicated shoppers took advantage of discounting in June to clear inventory.

“U.S. jobs rebounded in June after slumping in May because of the impact on the car industry from Japan’s earthquake,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “The job data shows the drop was temporary.”

Energy producers posted the biggest increase on the MSCI Asia Pacific Index after oil prices traded near the highest level in three weeks, and a gauge of metal prices rose in London.
Energy Producers Jump

BHP advanced 1.2 percent to A$44.97, the second-biggest drive to the MSCI Asia Pacific Index’s advance. Rio Tinto Group, the world’s second-largest mining company by sales, climbed 1.1 percent to A$84.48. PetroChina Co., China’s No. 1 oil and gas producer by market value, rose 1.7 percent to HK$11.72.

Energy stocks advanced as crude oil for August delivery rose as much as 0.3 percent to $98.97 a barrel in New York, after climbing yesterday to $98.67, the highest settlement since June 14. The London Metal Exchange Index of prices for six metals including copper and aluminum increased 2 percent yesterday to its highest level since May 3.

Shinhan Financial, the biggest drag on the MSCI Asia Pacific Index, slumped 3.3 percent to 50,300 won in Seoul. State-run Korea Deposit Insurance Corp. sold 2.9 million Shinhan Financial shares for 51,000 won each today before the start of trading, according to an e-mailed statement today.

Li Ning Co., which designs and makes sportswear in China, dropped 7.6 percent to HK$10.66, the biggest decline on the MSCI Asia Pacific Index. The company’s share price target was reduced by DBS Group Holdings Ltd., Mizuho Financial Group Inc. and United Overseas Bank Ltd. after the company said yesterday it expects first-half sales and profit margin to decline.

The MSCI Asia Pacific Index lost 0.3 percent this year through yesterday, compared with a gain of 7.6 percent by the S&P and an increase of less than 0.1 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.9 times estimated earnings on average, compared with 13.6 times for the S&P 500 and 11.2 times for the Stoxx 600.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
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