Asian Stocks Rise on Earnings Reports; Yen, Treasuries Decline

By Masaki Kondo and Patrick Rial
Oct. 23 (Bloomberg) -- Asian stocks advanced as Kia Motor Corp. reported record profit and Wesfarmers Ltd. said sales rose, boosting speculation the global economic recovery is gathering pace. The yen weakened against the euro and Treasuries fell.
Kia, South Korea’s second-largest automaker, gained 5.5 percent. Hyundai Motor Co., the biggest, added 4.4 percent after saying that earnings tripled. Wesfarmers, Australia’s No. 2 retailer, surged 6.9 percent. The yen sank to the lowest in more than two months against the euro, and U.S. 10-year notes fell ahead of reports that analysts expect will show German business confidence rose to a 13-month high and U.S. home sales climbed.
The MSCI Asia Pacific Index gained 0.5 percent to 119.80 as of 2:28 p.m. in Tokyo, as five stocks rose for three that fell.
The gauge, which has gained 0.2 percent this week, has climbed 70 percent from a five-year low on March 9 on signs the global economy is recovering from its worst slump since World War II.
"The momentum behind stocks is still good, even though shares aren’t really cheap," said Hiroyasu Ito, a Tokyo-based fund manager at Dai-Ichi Mutual Life Insurance Co., which holds
$296 billion of assets. "First-half profits look likely to exceed expectations, however I’m not confident that demand is there to support earnings in the second half."
Japan’s Nikkei 225 Stock Average advanced 0.2 percent, with Daiwa House Industry Co. and Tokyu Land Corp. climbing more than
4 percent after earnings increased faster than forecast.
Australia’s S&P/ASX 200 Index gained 1 percent. Benchmark indexes rose in most Asian markets open for trading.

Power Generators

Cnooc Ltd., China’s largest offshore oil producer, added
5.6 percent in Hong Kong after an adviser to China’s central bank proposed continuing economic stimulus measures. China is the world’s fastest-growing energy-consuming nation.
Power utilities fell the most among the 10 industry groups in the MSCI index, dragged down by concern that Japanese interest rates will rise and swell financial costs.
Futures on the Standard & Poor’s 500 Index advanced 0.3 percent. The gauge jumped 1.1 percent yesterday as quarterly profit at insurer Travelers Cos. quadrupled and banks including PNC Financial Services and Fifth Third Bancorp said lending was becoming more profitable.
In the past five days, the MSCI Asia Pacific Index has advanced 0.5 percent, set for a third weekly gain. Signs corporate earnings were improving prompted investors to shift to higher-yielding assets, spurring the drop in the yen and Treasuries.

Treasuries, Dollar

The yield on the benchmark 10-year note rose three basis points to 3.45 percent, according to data compiled by Bloomberg.
The yen weakened to as low as 137.84 against the euro, the lowest since Aug. 13. The Japanese currency traded at 91.71 per dollar.
The Ifo institute in Munich will probably say its business climate index increased to 92 in October from the previous month, according to economists’ estimates. That would be the highest reading since September 2008.
The MSCI Asia Pacific Index has climbed 34 percent this year, headed for its biggest annual increase since 2003. The rally lifted the average price of shares on the gauge to 23 times estimated net income for this year, higher than those for benchmark indexes in the U.S. and Europe, according to data compiled by Bloomberg.
Kia jumped 5.5 percent to 18,100 won. Net income totaled
402 billion won ($340 million) in the three months to Sept. 30, compared with a loss a year earlier, the company said today.

Earnings, Ratings

Hyundai Motor added 4.4 percent to 107,500 won after Morgan Stanley and Deutsche Bank AG lifted their estimates for the shares. The carmaker said yesterday that third-quarter profit more than tripled, helped by the weaker won and surging sales in the U.S. and China.
Wesfarmers surged 6.9 percent to A$28.26. Food and liquor sales rose 7.3 percent in the three months through Sept. 27.
Daiwa House gained 4.3 percent to 1,010 yen, and Tokyu Land, which develops houses and condominiums, added 4.6 percent to 410 yen. First-half profit was probably more than twice its forecast, Daiwa House said in a preliminary earnings report yesterday.
Tokyu Land expects net income that’s 31 percent more than its target, according to the company’s preliminary report.
Kirin Holdings Co., Japan’s largest beverage maker, rose 6 percent to 1,486 yen. Morgan Stanley boosted its investment rating on the stock to "overweight" from "equal weight,"
citing "solid" sales.

Debt Concern

Cnooc added 5.6 percent to HK$12.92, the sharpest gain on Hong Kong’s Hang Seng Index. Bank of Communications Co. rose 2.6 percent to HK$10.38.
China’s government should keep fiscal-stimulus spending intact for another year to allow for a "full recovery in 2011," Fan Gang, an adviser to the central bank, said in an interview in Toronto, where he’s attending a Canada China Business Council event.
Tokyo Electric Power Co., Asia’s biggest utility, slumped
1.3 percent to 2,230 yen, and Kansai Electric Power Co. slid 1.4 percent to 1,982 yen.
Yields on 10-year Japanese government bonds climbed to a two-month high today. The Nikkei newspaper said on Oct. 20 that Finance Minister Hirohisa Fujii "indicated" new government debt sales may exceed 50 trillion yen for the year to March 2010.
"Investors are starting to bet long-term interest rates will go up, considering Japan’s current financial state," said Tsutomu Yamada, a market analyst at kabu.com Securities Co. in Tokyo. "Higher borrowing costs will inevitably increase interest-repayment burdens on power generators, which are saddled with debt."