Asian stocks advance as Japanese exporters gain on weaker yen

TOKYO, July 30 — Asian stocks rose, with the regional benchmark index heading for its first advance in five days, as Japanese exporters gained after the yen weakened, and China’s central bank injected funds into the money market.

Toyota Motor Corp. climbed 2.9 per cent in Tokyo as the yen’s weakness boosted the outlook for export income. Daiwa Securities Group Inc., Japan’s second-largest brokerage, rose 3.3 per cent after posting earnings that beat analyst estimates. Jiangxi Copper Co., China’s biggest producer of the metal, dropped 3.2 per cent in Hong Kong after copper futures declined.

The MSCI Asia Pacific Index added 0.5 per cent to 133.81 as of 5:42 p.m. in Tokyo, with almost two shares rising for each that fell. The gauge is headed for a 2.5 per cent advance this month after China pledged to do more to support transition in the world’s second-largest economy and earnings at companies from Daihatsu Motor Co. to Nomura Holdings Inc. beat analyst estimates.

“As the yen continues to weaken, profit at Japanese exporters will improve,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about US$207 billion (RM667.89 billion). “That should drive earnings upgrades, boosting the share market. The market will remain volatile as investors await Japan’s economic reforms. The market is still hung up on the prospects of the Federal Reserve’s stimulus tapering.”

Japan’s Topix index rose 1.8 per cent to close higher for the first time in five days. The benchmark Nikkei 225 Stock Average climbed 1.5 per cent.

Fading optimism

The Topix has climbed 34 per cent this year amid optimism Prime Minister Shinzo Abe will push through reforms while the Bank of Japan continues record stimulus to beat deflation. The gauge traded at 1.23 times book value, compared with 2.48 for the S&P 500 and 1.70 for the Stoxx Europe 600 Index.

“The market is range-bound,” said Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management Co., which oversees about $51 billion. “At the beginning of this year, stocks extended gains on widespread optimism, but it’s not like that now.”

Japan’s factory output declined 3.3 per cent in June, the most since March 2011 when the nation was hit by a record earthquake. That was lower than any forecast in a Bloomberg News survey of 29 economists whose median estimate was for a 1.5 per cent drop. A separate report showed the jobless rate fell to 3.9 per cent in June, the lowest since 2008.

Liquidity boost

China’s Shanghai Composite Index increased 0.7 per cent, heading for its first advance in five days. The country’s central bank conducted reverse-repurchase operations for the first time in five months, helping alleviate a cash squeeze that drove the benchmark interbank lending rate to a four-week high. The People’s Bank of China added 17 billion yuan ($2.8 billion) to the financial system today at a yield of 4.4 per cent using seven-day reverse repos, according to traders.

Hong Kong’s Hang Seng Index increased 0.5 per cent. South Korea’s Kospi Index added 0.9 per cent, while Taiwan’s Taiex Index gained 1 per cent. Singapore’s Straits Times Index added 0.4 per cent and Australia’s S&P/ASX 200 Index closed little changed. New Zealand’s NZX 50 Index dropped 0.6 per cent.

India’s S&P BSE Sensex slid 1 per cent, erasing gains of as much as 0.4 per cent, after the nation’s central bank left interest rates unchanged.

The Asia-Pacific gauge fell 7.8 per cent through yesterday from this year’s high on May 20 amid signs China’s economic slowdown is deepening and on concern the Federal Reserve will start tapering monetary stimulus. Shares on the gauge traded at 12.9 times estimated earnings as of yesterday, compared with 15.3 times for the Standard & Poor’s 500 Index and 13.5 times for the Stoxx Europe 600 Index.

US futures

Futures on the S&P 500 Index added 0.2 per cent. The gauge fell 0.4 per cent in New York yesterday as energy shares led losses amid a plunge in natural gas and a report showed a drop in pending home sales.

Japanese exporters rose after the yen fell as much as 0.5 per cent today, heading for its first drop in four days. A weaker yen boosts the overseas income of the nation’s carmakers and electronics manufacturers when repatriated.

Toyota, the world’s biggest carmaker, climbed 2.9 per cent 6,070 yen in Tokyo. Sony Corp., the maker of Bravia Televisions and PlayStation game consoles, increased 2.9 per cent to 2,117 yen. Panasonic Corp., Japan’s third-biggest TV maker, gained 2.3 per cent to 864 yen.

Tencent Holdings Ltd., China’s biggest Internet company, jumped 4 per cent to a record close of HK$363.60 in Hong Kong. The stock, which is leading gains in the Hang Seng Index this year, advanced 4.1 per cent last week after U.S. companies in the sector surged. The company accounted for almost half of the Hang Seng Index’s net increase today.

Earnings performance

Daiwa Securities advanced 3.3 per cent to 839 yen. Net income rose to 57.3 billion yen ($582.4 million) for the three months ended June 30 from 2.7 billion yen a year earlier, the company said in a statement yesterday. The results beat the average 51.1 billion yen estimate of six analysts surveyed by Bloomberg News.

Yakult Honsha Co., a maker pro-biotic and fermented milk drinks, surged 17 per cent to 4,935 yen after saying first- quarter profit increased to 3.8 billion yen from 1 billion a year earlier.

Of the 152 companies on the MSCI Asia Pacific Index that posted results since July 1 and for which estimates are available, 55 per cent exceeded analyst estimates, according to data compiled by Bloomberg.

Yanzhou Coal Mining Co. slumped 9.3 per cent to HK$5.26 after China’s fourth-largest producer of the fuel reported a preliminary first-half loss after forecasting a profit in April.

Raw-materials producers declined as copper and gold futures fell. Jiangxi Copper slipped 3.2 per cent to HK$13.18 in Hong Kong. Zijin Mining Group Co., China’s biggest gold producer, fell 3 per cent to HK$1.64.

Woolworths Ltd. dropped 1.6 per cent to A$33.22 after Australia’s largest retailer said challenging economic condition were evident in the second quarter. — Bloomberg