Asian stocks rose for a fourth day, with the regional benchmark index extending a six-year high, before the Federal Reserve updates markets on monetary policy today and as the U.S. and European Union strengthened sanctions against Russia.

Honda Motor Co. climbed 3.2 percent in Tokyo after the carmaker raised its profit forecast to the highest in seven years. Oversea-Chinese Banking Corp. gained 1.7 percent as it prepares to take Hong Kong’s Wing Hang Bank Ltd. private after shareholders accepted its $5 billion takeover offer. Hyundai Heavy Industries Co. tumbled 9.2 percent after South Korea’s biggest shipbuilder reported a wider-than-expected second-quarter loss.

The MSCI Asia Pacific Index (MXAP) added 0.4 percent to 150.01 as of 11:41 a.m. in Hong Kong, with eight of its 10 industry groups rising. The gauge climbed 2.6 percent this month through yesterday, when it closed at the highest level since June 2008, as a gauge of Chinese manufacturing added to signs Asia’s biggest economy is stabilizing and earnings at companies including Nissan Motor Co. and Fanuc Corp. beat estimates.

“The market rally looks sustainable,” Mark Matthews, Singapore-based head of Asia research for Bank Julius Baer & Co., which oversees about $377 billion, said by phone. “The major risk factors for the market are geopolitics and the direction of U.S. interest rates. The Fed will probably start raising rates in September 2015, but it’s going to be so small that it will have a very small impact.”

Russia Sanctions

The U.S. sanctioned three Russian banks and a state-owned shipbuilder that serves Russia’s navy and oil and gas industry, joining with the European Union in escalating penalties for action in Ukraine. The EU curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions yet over President Vladimir Putin’s backing of rebels in eastern Ukraine.

South Korea’s Kospi index advanced 0.9 percent. The nation’s industrial output expanded 0.6 percent in June from a year earlier, missing economist estimates for a 1 percent increase, government data showed.

Japan’s Topix index added 0.1 percent. The nation’s industrial output fell the most since the March 2011 earthquake, highlighting the widening impact to the economy following April’s sales-tax increase. Production dropped 3.3 percent in June from May, the trade ministry said today, more than twice the median forecast for a 1.2 percent contraction in a Bloomberg News survey of 31 economists. The yen held at 102.13 per dollar after falling 0.3 percent yesterday.

China Climbs

The Hang Seng China Enterprises Index (HSCEI) of mainland shares traded in Hong Kong advanced 0.5 percent, gaining for a seventh day in the longest winning streak since June 2010. The benchmark Hang Seng Index rose 0.7 percent. China’s Shanghai Composite lost 0.1 percent. Taiwan’s Taiex gained 0.3 percent.

New Zealand’s NZX 50 Index was little changed and Singapore’s Straits Times fell 0.1 percent. Australia’s S&P/ASX 200 Index advanced 0.6 percent.

The MSCI Asia Pacific Index traded at 13.5 times estimated earnings yesterday compared with 16.5 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

“Valuations don’t look cheap but they’re not terribly expensive either, so I’m optimistic on equities over the next 12 months,” Mark Lister, Wellington-based head of private wealth research at Craigs Investment Partners Ltd., which has about $6.8 billion under management, said by phone. “Growth is accelerating and central bank policies are supportive.”

Of the companies on the Asia-Pacific benchmark that have posted results since the beginning of July and for which Bloomberg has estimates, 57 percent beat earnings expectations.

Earnings Performance

Honda climbed 3.2 percent to 3,660 yen. Net income will probably rise 4.5 percent to 600 billion yen ($5.9 billion) in the year ending March 31, the Tokyo-based carmaker said in a statement today. That compares with the 595 billion yen the company previously forecast and lags behind the 631.4 billion yen average of 25 analyst estimates compiled by Bloomberg.

Komatsu Ltd. gained 1 percent to 2,375 yen as Japan’s biggest maker of construction equipment posted a 1.1 percent gain in first-quarter profit as sales in Latin America, Europe and parts of Asia helped overcome a slump in China.

L’Occitane International S.A. (973) jumped 4.9 percent to HK$19.30 in Hong Kong. JPMorgan Chase & Co. raised its rating on the stock to overweight from neutral after the cosmetics maker reported increased sales.

Wing Hang Delisting

Overseas Chinese Banking rose 1.7 percent to S$9.93 in Singapore, heading for its highest close since January. OCBC will delist Wing Hang after raising its ownership to 97.52 percent, the two lenders said in statements yesterday, the last day of the offer.

Among shares that fell, Nomura Holdings Inc. slipped 1.7 percent to 654.5 yen after Japan’s biggest brokerage posted a 70 percent drop in net income to 19.9 billion yen in the three months ended June, missing analysts’ estimates for 26 billion yen.

Hyundai Heavy tumbled 9.2 percent to 153,000 won in Seoul after reporting a second-quarter net loss 489 billion won ($477.5 million), exceeding the 81.9 billion loss estimate by analysts.

U.S. Futures

Futures on the S&P 500 added 0.1 percent today. The U.S. benchmark index yesterday slipped 0.5 percent as President Barack Obama announced new sanctions against Russia and warned its actions in Ukraine are “setting back decades of progress,” snuffing out gains led by telecommunication stocks.

Economic reports yesterday showed improving U.S. consumer sentiment while the housing market remains in a slowdown. The Conference Board’s consumer confidence index rose to 90.9, the highest reading since October 2007. Residential real-estate prices advanced 9.3 percent in the 12 months ended May, the slowest pace in more than a year, according to the S&P/Case-Shiller index of property values in 20 cities.

The Federal Reserve is expected to taper its bond-buying program for the sixth time at a two-day policy meeting that ends today. Investors will get a reading on second-quarter U.S. economic growth today, while the government’s labor report on Aug. 1 may show employers added 231,000 jobs this month.

 

Source: Bloomberg

 

---