Asian Stocks Advance on Brokerage Upgrades; Samsung, STX Climb
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By Shani Raja
Sept. 22 (Bloomberg) -- Asian stocks rose for the first time in three days as brokerage upgrades fueled speculation that regional equities can extend a six-month rally.
Samsung Electronics Co. gained 3.4 percent in Seoul after Citigroup Inc. raised its price estimate and chip prices climbed to their highest level in more than a year. LG Chem Ltd. and Samsung SDI Co. jumped at least 6.4 percent after being lifted to “overweight” at Morgan Stanley. China Mobile Ltd. advanced 2.4 percent in Hong Kong after it added customers at a faster rate in August than the previous month.
The MSCI Asia Pacific excluding Japan Index rose 1 percent to 393.28 as of 6:39 p.m. in Hong Kong. Markets in Japan, Malaysia, Indonesia and Pakistan were shut for holidays. The gauge that includes Japan has rallied 68 percent from a five- year low on March 9, lifting the average price of its stocks to 1.6 times book value from 1.03 at this year’s trough.
“Valuations at this juncture are not cheap,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “However, if underlying levels of economic activity can continue to improve and profitability continues to grow, that should be sufficient to sustain current market levels.”
South Korea’s Kospi index advanced 1.4 percent to 1,718.88, its highest close since June 20, 2008. STX Pan Ocean Co., the country’s biggest commodity-shipping line, rose 8 percent in Singapore after securing its largest contract. Hong Kong’s Hang Seng Index added 1.1 percent at the close.
Valuation Concerns
The Shanghai Composite Index fell 2.3 percent to 2,897.55, its lowest close since Sept. 7. Australia’s benchmark S&P/ASX 200 Index lost 0.3 percent at the close. Macquarie Airports Ltd. climbed 3 percent in Sydney after saying it may be compensated if debt costs rise.
Futures on the U.S. Standard & Poor’s 500 Index gained 0.7 percent. The gauge fell 0.3 percent to 1,064.66 yesterday on speculation a six-month rally has outpaced prospects for profit growth, even as an index of U.S. leading economic indicators rose for the fifth-straight month.
“We are never out of the woods,” said Donald Gimbel, senior managing director of Carret & Co., which manages $1.5 billion in assets. “One has to buy quality companies that aren’t overvalued. It sounds simple, but it takes work to find stocks that meet our strict criteria.”
Samsung Electronics, the world’s largest computer-memory chipmaker, gained 3.4 percent to 825,000 won in Seoul. Citigroup raised its price estimate to 1,030,000 won from 900,000 won on expectations earnings will benefit from growing demand for computer-memory chips, according to a note yesterday.
STX Pan Ocean
Separately, the price of the benchmark computer-memory chip climbed 1.1 percent yesterday to the highest level since Aug. 27, 2008, according to Dramexchange Technology Inc.
LG Chem climbed 10.8 percent to 246,000 won, while Samsung SDI jumped 6.4 percent to 174,500 won. Morgan Stanley upgraded the companies from “equal weight” in a report that said they may sign additional auto battery contracts.
China Mobile, the world’s largest cell-phone operator by users, gained 2.4 percent to HK$80.30. The company said it added 5.26 million subscribers in August, more than the 4.55 million that joined the previous month.
In Singapore, STX surged 8 percent to S$14.36 after winning a 25-year contract to move iron ore for Vale SA to China from Brazil. News that the two companies were in talks boosted STX’s shares in Seoul by 8.2 percent yesterday. The Singaporean stock didn’t trade yesterday because of a public holiday.
Beating Estimates
The MSCI Asia Pacific Index’s six-month rally has been driven by better-than-estimated economic reports and corporate earnings. Of 648 companies on the gauge that reported net income for the latest quarter, 225 beat analyst predictions, compared with 138 that missed.
The MSCI index has now recovered to levels last seen before the collapse of Lehman Brothers Holdings Inc. a year ago. The ensuing credit crisis caused more than $1.6 trillion in losses at financial institutions and helped drag economies globally into recession.
Governments around the world responded by boosting spending, cutting taxes and slashing interest rates to revive growth. Withdrawing these measures too early may derail the global recovery and lead to a protracted slowdown, the Asian Development Bank said today.
“Heightened levels of liquidity combined with a debt binge by governments have served the global economy well,” said Pengana’s Schroeders. “As conditions continue to moderate, the focus will shift on to the ability of economies around the world to become self-sustaining.”
Macquarie Airports
Macquarie Airports climbed 3 percent to A$2.75. Macquarie Group Ltd., Australia’s biggest investment bank, may pay back the A$345 million ($280 million) fee it is set to receive for ending ties with the affiliate if the plan raises its debt costs. Macquarie Group shares added 0.8 percent to A$54.79.
Among stocks that fell, Tangshan Iron & Steel Co., part of China’s second-largest steelmaking group, slumped 7.5 percent to 6.90 yuan as its shares resumed trading after China’s securities regulator approved a plan to combine with associate companies.
Metro Pacific Investments Corp. tumbled 32 percent to 3.25 pesos in Manila trading after agreeing to sell shares at a 37 percent discount to last week’s closing price.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
Last Updated: September 22, 2009 06:42 EDT
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