Asian stocks jump to 11-month high

Published: 2009/08/04

HONG KONG: Asian stocks climbed to an 11-month high today on hopes a V-shaped recovery may be forming in the US, while the Australian dollar hit its highest since late September after solid housing and retail sales data.

The batch of economic reports increased speculation the Reserve Bank of Australia at a policy meeting later in the day will indicate a shift away from its its rate cutting bias, and express more optimism on the economy, weighing on government bonds.Corporate results also inspired optimism.

Shares of HSBC, Europe’s largest lender, climbed 8 per cent after first half profits were cut in half compared with a year ago but still beat analysts’ forecasts, spurring a wave of brokerage upgrades.“A further improvement in economic indicators around the world and stronger-than-expected corporate earnings are giving a further boost to global stock markets, including Japan,” said Yumi Nishimura, deputy general manager at Daiwa Securities SMBC in Tokyo.

Japan’s Nikkei share average rose 1.1 per cent to a 10-month high, driven by technology-related stocks. Toyota Motor Corp, whose shares gained 0.5 per cent, will report quarterly results later in the day.The MSCI index of Asia Pacific stocks outside Japan also climbed 1.1 per cent, with the materials sector outperforming by a wide margin, up 2.9 per cent.

Since March 9, when a global equity market rally began, the index has risen 77 per cent, leading the world. Valuations have been ticking higher, but so far investors have been comfortable paying what they view as a growth premium.

On a 12-month forward basis, the Asia Pacific index is trading at around 14.8 times earnings, below the last bull market peak of 16 times.Hong Kong’s Hang Seng index advanced 1.7 per cent to the highest since late August, led by HSBC.Elsewhere, Australia’s benchmark was up 1.3 per cent. - Agencies