BLBG:Asian Stocks at Seven-Month High on China Manufacturing
Asian stocks gained, with the regional benchmark index heading for its highest close in seven months, after gauges of Chinese manufacturing expanded last month, signaling faster growth in the the world’s No. 2 economy.
Metallurgical Corp. of China, an engineering contractor and equipment manufacturer, climbed 2.9 percent in Hong Kong. Hyundai Motor Co. (005380), South Korea’s biggest carmaker, rose 1.8 percent after saying U.S. vehicle sales increased last month. Shimizu Corp., a construction company, advanced 5.2 percent in Tokyo on speculation a deadly highway-tunnel collapse will reduce opposition to more public works spending.
The MSCI Asia Pacific Index (MXAP) increased 0.2 percent to 124.88 as of 12:40 p.m. in Tokyo, poised for its highest close since May 2. About five shares rose for every four that fell on the gauge. The measure advanced 14 percent through Nov. 30 from this year’s low on June 4 as central banks added stimulus to spur growth and data showed a slowdown in China may be ending.
“The improving China manufacturing data is a good start to the week,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. The Swiss bank has about $1.5 trillion under management. “China activity is approaching a more upbeat level and the hard landing scenario is well behind.”
The Nikkei 225 Stock Average (NKY) gained 0.7 percent in Tokyo and South Korea’s Kospi Index added 0.4 percent. Australia’s S&P/ASX 200 Index climbed 0.5 percent. Hong Kong’s Hang Seng Index was little changed, while China’s Shanghai Composite Index lost 0.3 percent.
China PMI
China’s official Purchasing Managers’ Index, a gauge of the manufacturing industry, was 50.6 in November, the highest reading in seven months, data released by the National Bureau of Statistics and China Federation of Logistics and Purchasing on Dec. 1 showed. A reading above 50 indicates expansion.
A separate survey by HSBC Holdings Plc and Markit Economics, which focuses on smaller businesses, also showed an expansion. Services industries maintained their pace of growth last month, according to a PMI released today that rose to 55.6 from 55.5 in October.
The Chinese government may maintain its annual economic growth target at 7.5 percent next year in a sign the new leadership headed by Xi Jinping won’t tolerate a bigger slowdown from the lowest goal since 2004. Nine of 16 analysts surveyed over the past two weeks by Bloomberg News forecast the government will set a goal unchanged from 2012, while six expect a decline to 7 percent and one sees an increase to 8 percent.
Metallurgical Corp. of China climbed 2.9 percent to HK$1.42 in Hong Kong. Huaneng Power International Inc. (902), an electricity producer that gets 84 percent of revenue from China, jumped 4.7 percent to HK$6.88.
U.S. Futures
“Improving local demand, aided by surging liquidity in Asia’s more open economies, should help to buffer growth in the coming months,” Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc, said in a note today. “The risk is external. If the tiff over the cliff finds no resolution, a U.S. recession would knock over growth in Asia. More likely, however, is a partial resolution, weighing on consumer demand in the first quarter but leading to stabilizing investment spending.”
Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. The S&P 500 closed little changed on Nov. 30 and ended 0.5 percent higher for the week as investors watched developments in government budget negotiations amid better-than- anticipated economic reports. A budget deal would avert more than $600 billion of automatic tax increases and spending cuts next year, the so-called fiscal cliff.
Long-Range Rocket
Hyundai Motor gained 1.8 percent to 229,500 won in Seoul. The carmaker’s November U.S. sales increased 8 percent to 53,487, paced by gains for its Elantra and Sonata models, the company reported in a Twitter post.
South Korean defense shares climbed after North Korea said it will fire a long-range rocket. Victek Co., a maker of electronic warfare equipment, jumped by the daily limit of 15 percent to 1,940 won. Firstec Co., a maker of components for helicopters and armored vehicles, rose 12 percent to 2,080 won.
“Bets that geopolitical risks may rise are driving some defense stocks higher,” Kim Gi Bo, a Seoul-based fund manager at Friend Investment Management, said today. “Previous provocations by the North turned out to have a short-lived and limited impact on our markets and I think this time will be the same.”
Tunnel Collapse
Japanese construction companies advanced after a fatal tunnel collapse raised the outlook for infrastructure spending. Shimizu climbed 5.2 percent to 261 yen. Obayashi Corp. advanced 3.9 percent to 404 yen. Komatsu Ltd. (6301), a maker of construction machinery, added 0.7 percent to 1,859 yen.
“There are expectations Japan’s government will boost infrastructure spending after the tunnel accident,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which has 33 trillion yen ($400 billion) in assets. “There’s also increasing focus on politicians’ calls for monetary easing.”
The MSCI Asia Pacific Index advanced last week amid optimism U.S. lawmakers would agree on a budget deal that will help avert the fiscal cliff and as the front-runner to win Japan’s election this month repeated calls for stimulus. The gauge traded at 14.1 times estimated earnings, compared with 13.6 times for the S&P 500 and 12.5 times for the Stoxx Europe 600 Index.
Japan’s utility companies dropped after Goldman Sachs Group Inc. cut investment ratings. Shikoku Electric Power Co. sank 8.6 percent to 1,025 yen and Kyushu Electric Power Co. declined 5.8 percent to 727 yen as the U.S. brokerage recommended investors sell their shares.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
