Asian Stocks Outside Japan Rise as Health-Care Companies Advance

Feb 14, 2014 6:15 am ET

Feb. 14 (Bloomberg) -- A gauge of Asian shares outside Japan climbed, posting the biggest weekly gain since June, as health-care and information technology companies advanced. Stocks in Tokyo tumbled after the yen strengthened.

Shandong Weigao Group Medical Polymer Co. jumped 6.4 percent in Hong Kong to lead health-care companies higher. Tencent Holdings Ltd. rose to a record after Jefferies Hong Kong Ltd. boosted its target price on Asia’s largest Internet company by market value. Kirin Holdings Co. fell 9.2 percent after the Japanese beverage maker’s profit forecast missed estimates.

The MSCI Asia Pacific excluding Japan Index advanced 0.9 percent to 455.89 as of 7:14 p.m. in Hong Kong, completing a 2.8 percent gain this week. The Asian equities measure that includes Japan added 0.2 percent to 135.42, paring gains of as much as 0.7 percent.

“We remain positive on risk assets and don’t see any reason to pull back,” Manpreet Gill, a Singapore-based senior investment strategist at Standard Chartered Bank, said by phone. “Economic data in the U.S. hasn’t been brilliant but the overall uptrend hasn’t really changed. Things need to become materially worse before we change our view on equities. Chinese inflation isn’t a worry as monetary policy there remains pretty tight.”

A report today showed China’s consumer-price increases stayed subdued in January while factory-gate prices extended the longest drop since the 1990s, in a sign of moderating demand in the world’s second-largest economy.

Equities Rebound

The MSCI Asia Pacific Index climbed back after losing 4.6 percent in January, its worst start since 2009, amid concern about Federal Reserve stimulus cuts, a slowdown in China and volatility in developing markets. Global equity losses in 2014 peaked at $3 trillion on Feb. 4 and have since narrowed to about $511 billion, data compiled by Bloomberg show.

“It seems reasonable to start looking at bargains in the emerging markets,” said George Boubouras, who helps oversee $30 billion as chief investment officer at Equity Trustees Ltd. in Melbourne.“The selloff has been extraordinary.”

Hong Kong’s Hang Seng Index gained 0.6 percent. South Korea’s Kospi index rose 0.7 percent, and Taiwan’s Taiex index climbed 0.5 percent. Australia’s S&P/ASX 200 Index added 0.9 percent, while New Zealand’s NZX 50 Index gained 0.3 percent. India’s S&P BSE Sensex index rose 0.9 percent. Singapore’s Straits Times Index was little changed.

China Data

China’s Shanghai Composite Index gained 0.8 percent. The nation’s consumer price index rose 2.5 percent from a year earlier, the National Bureau of Statistics said today in Beijing, the same pace as in December. The producer-price index fell 1.6 percent.

Japan’s Topix index slipped 1.3 percent, erasing gains of as much as 0.8 percent, as the yen strengthened.

“We’re lacking in catalysts now,” said Juichi Wako, a Tokyo-based equity market strategist at Nomura Holdings Inc., the nation’s biggest brokerage. “Investors very much want to see how U.S. economic data pans out.”

Futures on the Standard & Poor’s 500 Index fell less than 0.1 percent. The equities gauge climbed 0.6 percent yesterday as a $45.2 billion takeover of Time Warner Cable Inc. outweighed the biggest drop in retail sales since June 2012.

Receipts at U.S. retailers unexpectedly declined 0.4 percent in January amid bad weather and uneven progress in the labor market, a report showed yesterday, signaling the economy was off to a slow start this year. Jobless claims increased by 8,000 to 339,000 in the week ended Feb. 8.

Relative Value

Shares on the MSCI Asia Pacific Index trade at 12.7 times estimated earnings compared with 15.5 for the S&P 500 and 14.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Of the 352 companies on the Asian measure that have reported quarterly earnings since the beginning of January and for which estimates are available, 54 percent beat profit expectations, Bloomberg-compiled data show.

Shandong Weigao jumped 6.4 percent to HK$9.91 in Hong Kong, posting its second weekly advance. The shares are rebounding after slumping 13 percent last month when the company said it expects a “significant” decline in profit for 2013.

Tencent, Novatek

Tencent climbed 1.6 percent to HK$548.50 in Hong Kong, a record close. Jefferies maintained its buy rating and raised its share-price forecast by 34 percent to HK$660, saying it expects the company’s revenue from online games to increase this year.

Novatek Microelectronics Corp. climbed 3.9 percent to NT$133 in Taipei in Taipei after Cathay Futures Corp. said it sees the integrated circuits business rebounding in the second quarter.

Qantas Airways Ltd., Australia’s biggest carrier, climbed 2.5 percent to A$1.215, taking weekly gains to 14 percent, the most since June 2012. The shares rallied this week as the Sydney Morning Herald reported that Australian Treasurer Joe Hockey said Qantas met pre-conditions for government support.

Among stocks that fell, Kirin Holdings dropped 9.2 percent to 1,293 yen in Tokyo, the most since March 2011. Net income will probably fall 43 percent to 49 billion yen ($482 million) this year, the company said in a statement yesterday. That compares with the 60.6 billion yen average of 13 analysts’ estimates compiled by Bloomberg.

--Editors: Sarah McDonald, Jim Powell