Asian Stocks Rise Before U.S. Payrolls Data; Casino Shares Rally

May 02, 2014 6:23 am ET

May 2 (Bloomberg) -- Asian stocks rose, with the regional benchmark index ending at a one-week high, as investors weighed corporate earnings before the release of U.S. non-farm payrolls.

Wynn Macau Ltd. jumped 4.1 percent in Hong Kong after the gaming company beat analyst profit estimates and a report showed casino revenue from Macau exceeded expectations. China Railway Group Ltd. jumped 9.3 percent after HSBC Holdings Plc said in a report the Chinese government will raise investment in rail infrastructure. Hyundai Department Store Co. fell 2.3 percent in Seoul after posting earnings that fell short of analyst forecasts.

The MSCI Asia Pacific Index added 0.1 percent to 138.22 as of 6:17 p.m in Hong Kong. The measure rose less than 0.1 percent this week. While a report yesterday showed jobless claims in the U.S. jumped to a nine-week high, employment data due today is expected to show an improving labor market.

“The U.S. economy is somewhere in between good and bad but probably more on the good side,” Mark Matthews, head of Asia research for Julius Baer, which oversees about $377 billion, said on Bloomberg TV from Hong Kong. “The data won’t be as robust as people think. Generally, the world economy looks fine.”

Hong Kong’s Hang Seng Index gained 0.6 percent, while the Hang Seng China Enterprises Index of mainland shares traded in the city climbed 0.2 percent as trading resumed following the May Day holiday. Markets in mainland China are closed again today for a holiday.

China Concern

Taiwan’s Taiex index advanced 0.9 percent. New Zealand’s NZX 50 Index added 0.5 percent, while Australia’s S&P/ASX 200 Index gained 0.2. Japan’s Topix index closed little changed, reversing earlier losses of as much as 0.4 percent. South Korea’s Kospi index slid 0.1 percent. Singapore’s Straits Times Index dropped 0.4 percent.

Companies from Mitsubishi Corp. to Westpac Banking Corp. will release results next week. Of the 275 firms on the MSCI Asia Pacific Index that posted results since the beginning of April and for which estimates were available, 53 percent beat estimates for profit, according to data compiled by Bloomberg.

“While earnings have been relatively good, concerns remain over slowing economic growth in China,” Tim Radford, a strategist at Rivkin Securities in Sydney, said by phone.

China’s official manufacturing purchasing managers’ index rose to 50.4 in April, data showed yesterday, missing the 50.5 median estimate of economists polled by Bloomberg.

Relative Value

The MSCI Asia Pacific Index traded at 12.6 times estimated earnings yesterday, compared with 16 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 added 0.1 percent today. The gauge closed little changed yesterday, while the Dow Jones Industrial Average retreated from a record, ahead of today’s payrolls report.

U.S. employers probably added 218,000 workers in April, up from an increase of 192,000 in March, according to the median estimate in a Bloomberg survey of 94 economists. The Fed, which announced its fourth straight $10 billion cut to stimulatory bond buying April 30, says the job market in the world’s largest economy is improving.

Data yesterday showed claims for U.S. unemployment benefits rose to 344,000, the most since Feb. 22, beating economists’ estimates for a tally of 320,000. Separate reports showed the Institute for Supply Management’s gauge of U.S. manufacturing increased in April, while household purchases, which account for about 70 percent of the world’s largest economy, jumped by the most since August 2009.

Casinos Rally

Wynn Macau climbed 4.1 percent to HK$31.80 in Hong Kong. Adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 16 percent from a year earlier to $384.3 million, according to a statement by parent company Wynn Resorts Ltd. That surpassed the $367 million median estimate of five analysts surveyed by Bloomberg News.

Gaming companies also rallied after government data showed Macau casino revenue increased 10.6 percent from a year earlier to 31.3 billion patacas ($3.9 billion) in April. That exceeded the 7 percent median growth forecast by five analysts in a Bloomberg survey. Galaxy Entertainment Group Ltd., controlled by billionaire Lui Che-woo, rose 3 percent to HK$62.70. Sands China Ltd. added 2.1 percent to HK$57.80.

MediaTek Inc. jumped 7 percent to NT$505 in Taipei after the maker of chips used in wireless devices posted operating profit that beat analyst estimates.

Treasury Wine

China’s two biggest railway builders rallied in Hong Kong after HSBC reported that the Chinese government will increase railway investment by at least 23 percent to support economic growth. China Railway Group gained 9.3 percent to HK$3.77. China Railway Construction Corp. advanced 7.3 percent to HK$6.88.

Treasury Wine Estates Ltd. increased 6.5 percent to A$4.09 in Sydney after the Australian newspaper said Pernod Ricard SA is interested in buying its U.S. assets. Treasury “has not been approached by, and is not in discussions with, Pernod Ricard,” the Melbourne-based company said in a statement.

Among shares that fell, Hyundai Department Store slipped 2.3 percent to 130,000 won in Seoul, the lowest close since October 2012. The company reported first-quarter profit dropped 14 percent to of 77.5 billion won ($75.2 million) from a year earlier. That compares with the average estimate of 87.3 billion won by 12 analysts tracked by Bloomberg.