Asia stocks advance on China earnings, US report

  • Business
  • Thursday, 27 Aug 2009

SYDNEY: Asian stocks advanced, lifting the MSCI Asia Pacific Index to a two-week high, as Chinese companies increased earnings and a US consumer confidence report beat economists’ estimates.

Air China Ltd, the country’s biggest international carrier, surged 10% in Shanghai after first-half net income doubled. China Life Insurance Co, the nation’s biggest insurer, gained 3.2% as its profit climbed 15%.

“People are generally happy that things are improving,” said Tim Schroeders of Pengana Capital Ltd. “It’s now a question of how strong that is going to be. We’re probably still going to get the occasional rogue figure from time to time.”

The MSCI Asia Pacific Index rose 0.6% to 113.73 as of 7.22pm in Tokyo, the highest level since Aug 14. The gauge has climbed 61% from a more than five-year low on March 9 on speculation government stimulus packages and lower borrowing costs will revive the global economy.

Japan’s Nikkei 225 Stock Average gained 1.4% as a government report showed the country’s exports fell less than expected in July. China’s Shanghai Composite Index rose 1.8%, while Taiwan’s Taiex Index sank 1.3%, the region’s biggest drop.

A third of the 548 companies in the MSCI Asia Pacific Index that have reported net income since early July have exceeded analysts’ estimates, while 19% have missed, according to data compiled by Bloomberg.

Asian stocks have rallied this week after the National Association of Realtors said existing home purchases in the United States jumped in July by the most since the tallies began in 1999.

“The housing and confidence reports cemented evidence that the US economy is recovering,” said Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc. — Bloomberg

US Federal Reserve chairman Ben S. Bernanke said on Aug 21 that the global economy was “beginning to emerge” from recession after “aggressive” action from central banks and governments.

Companies on the Asian gauge are currently priced at an average 24 times estimated earnings, up from 13.7 times at the end of 2008, as improving economic data and better-than-expected corporate earnings worldwide point to a global economic recovery. — Bloomberg

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