Asian Stocks Rise on Toyota Industries Profit, South Korea GDP
Oct. 26 (Bloomberg) -- Asian stocks gained after ToyotaIndustries Corp. reported unexpected profit and South Korea’seconomy grew at the fastest pace in seven years, boosting theprospects for company earnings.
Toyota Industries, a component manufacturer controlled bythe world’s biggest carmaker, jumped 6.8 percent in Tokyo. HondaMotor Co., which gets 47 percent of its sales in North America,jumped 3 percent as the weakening yen lifted the outlook forexport earnings. Lotte Shopping Co. rose 3.3 percent afterreporting a 19 percent gain in third-quarter earnings.
“Companies’ desperate efforts to cut costs have resultedin a lower break-even point, and we’re about to see thesepositive effects in coming earnings reports,” said HisakazuAmano, who helps oversee the equivalent of $19 billion at T&DAsset Management Co.
The MSCI Asia Pacific Index advanced 0.8 percent to 120.49as of 11:49 a.m. in Tokyo, with three times as many sharesrising as falling. The gauge has climbed 71 percent from a five-year low on March 9 amid signs the global economy is bouncingback from its worst slump since World War II.
Japan’s Nikkei 225 Stock Average rose 1 percent, while theKospi Index advanced 1.1 percent in Seoul. Kia Motors Corp.,South Korea’s No. 2 carmaker, added 3.3 percent after CreditSuisse Group AG upgraded the stock.
Australia’s S&P/ASX 200 Index lost 0.4 percent, with BHPBilliton Ltd. losing 0.8 percent after oil prices declined. HongKong and New Zealand markets are closed for holidays.
Toyota Industries
Among shares that slumped, Acom Co. dropped 3.1 percentafter Japan’s largest consumer lender by market value reportedfirst-half profit that missed its estimate and cut a dividend.
Futures on the Standard & Poor’s 500 Index added 0.2percent. The gauge lost 1.2 percent in New York on Oct. 23 aslower oil prices drove down Exxon Mobil Corp. and SchlumbergerLtd. Capmark Financial Group Inc., the lender owned by companiesincluding Goldman Sachs Group Inc. and KKR & Co., filed forbankruptcy protection on Oct. 25 in the U.S.
Toyota Industries, 24 percent owned by Toyota Motor Corp.,jumped 6.8 percent to 2,515 yen in Tokyo. In a preliminaryearnings statement, the company reported 200 million yen ($2.18million) in net income for the six months to Sept. 30, comparedwith its forecast for a loss of 9.5 billion yen.
The unexpected profit “was attributable to brisk sales inthe auto parts segment,” Arifumi Yoshida, an analyst atCitigroup Inc., wrote in a report on Oct. 23. The company’searnings “also raised expectations about results announcementsfrom Toyota affiliates scheduled for next week.”
Kia Upgrade
Toyota added 1.7 percent to 3,650 yen and Honda, Japan’s No.2 automaker, climbed 3 percent to 2,890 yen. Both were thebiggest contributors to the MSCI Asia Pacific Index’s advance.
Japanese automakers rose as the yen fell to as much as92.21 per dollar today, the weakest level since Sept. 21, from91.66 at the 3 p.m. close of stock trading in Tokyo on Oct. 23.A weaker yen boosts the value of overseas sales at Japanesecompanies when converted into their home currency.
Kia Motors added 3.3 percent to 18,900 won after CreditSuisse Group AG lifted the stock to “neutral” from“underperform.” Market leader Hyundai Motor Co. climbed 3.7percent to 113,500 won.
Lotte Shopping, South Korea’s largest operator ofdepartment stores, rose 3.3 percent to 332,000 won. Thecompany’s third-quarter net income increased 19 percent asmargins improved at its discount stores.
Valuation Concern
South Korea’s third-quarter gross domestic product increased2.9 percent from the previous quarter, the central bank saidtoday. That was the fastest pace since the first quarter of 2002and compared with the 1.9 percent growth estimated by economists.
Shares on the MSCI Asia Pacific Index traded at an averageof 23 times estimated earnings, compared with 18 times for theS&P 500 and 16 times for Europe’s Dow Jones Stoxx 600 Index.Higher valuations on Asian equities have caused concern amonginvestors including T&D’s Amano about whether the current shareprices can be justified.
“There is a doubt as to whether the fundamentals of theglobal economy and company earnings will improve as fast asshare prices indicate,” he said. “It seems to me that thestock market is ahead of an actual fundamental improvement.”
BHP declined 0.8 percent to A$39.90 in Sydney. Inpex Corp.,Japan’s largest oil and gas explorer, fell 1.4 percent to790,000 yen. Crude oil for December delivery fell 0.6 percent,adding to a 0.9 percent drop in New York on Oct. 23.
Acom, a consumer lender 37 percent owned by Mitsubishi UFJFinancial Group Inc., fell 3.1 percent to 1,295 yen. The companysaid first-half net income was 85 percent lower than itsforecast on a preliminary basis and slashed its planned annualdividend by 83 percent. Citigroup Inc. reduced its 12-monthshare-price estimate on the stock by 43 percent to 706 yen.
To contact the reporters for this story:Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
Last Updated: October 25, 2009 22:51 EDTSource: Bloomberg
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