Asia stocks at three-month high

A combination of solid earnings from HSBC and BNP Paribas and strong US manufacturing data has significantly eased economic worries and boosted appetite for stocks,said Lee Sun-yeb,a market analyst at Shinhan Investment Corporation.

Earnings from BNP Paribas and HSBC topped forecasts and the US manufacturing sector grew in July for a 12th straight month,with growth slightly topping expectations. US stocks rose about 2 per cent.

Japan’s Nikkei average rose 1.3 per cent,helped by broad buying on easing worries about the global economic recovery after strong European bank results helped to send Wall Street to a 10-week closing high.

Exporters’ shares climbed on Wall Street’s gains,with electronics parts maker Kyocera Corp gaining 1.8 per cent and chip-tester maker Advantest Corp rising 1.4 per cent.

Japanese stocks are under pressure even more than their peers in Europe and the United States because investors can’t disregard worries about the strong yen’s impact on corporate earnings going forward,said Masaru Hamasaki,a senior strategist at Toyota Asset Management.

Hong Kong stocks rose 0.2 per cent to a three-month closing high,after HSBC’s earnings pushed investors back to riskier assets such as emerging markets equities. HSBC shares rose 1.8 per cent in Hong Kong.

In a sign that carry trades are fuelling the current rally,the greenback hovered near a three-month low against a basket of currencies as both Asian bonds and stocks rose.

The dollar hit multi-month lows against major currencies,stung by speculation that US interest rates will stay low.

In this case,the carry trades will involve investors using cheaply borrowed US dollars to finance more lucrative trades in higher-yielding currencies and assets such as emerging market equities and bonds.

Liquidity is flowing back,and it’s looking very strong,said Patrick Yiu,director at CASH Asset Management. Capital is flowing in right now and this may help the stock market in Hong Kong see more gains.

However,Shanghai stocks ended 1.7 per cent lower,easing off a 2- month high and weighed down by concerns over more fundraising.

Medium-sized Chinese brokerage GF Securities said it planned to raise up to 18 billion yuan ($2.65 billion) in a private share placement to expand core businesses including underwriting share issues.

China’s biggest military supply provider,Jihua Group,set the price range for its Shanghai initial public offering to raise as much as 4.05 billion yuan ($597.9 million).

The Shanghai Composite Index has risen about 11 per cent over the last month.

Australian stocks rose 0.7 per cent to their highest level in six weeks.

But while overseas news was mostly supportive,domestic data was mixed,showing retail sales rose only modestly in June and approvals to build new homes slipped for a third straight month,reflecting the drag of past rate hikes on the economy.

The Reserve Bank of Australia kept rates unchanged as expected and its neutral tone provided some support for stocks late in the day as markets continued to price out near-term rate hikes.

Linc Energy was placed on trading halt pending an announcement on the sale of a coal tenement to Adani Enterprises.

Linc Chief Executive Peter Bond said the deal was worth A$3 billion,including A$500 million in cash,plus royalties over the next 20 years.

South Korean shares rose half a per cent as technology stocks such as LG Electronics rallied on stronger than expected US data while Hanwha Chemical climbed after news of an acquisition.

Taiwan stocks finished up 0.6 per cent at a three-month closing high,with Advance Semiconductor Engineering Inc (ASE) outperforming after the world’s top chip packager bought the Singapore unit of an Italian rival.

A stronger Taiwan dollar also boosted buying in asset plays. Taiwan Fertilizer Co Ltd,which has large land assets in Taiwan,jumped 3.5 per cent.

Shares in India rose 0.2 per cent. However,Singapore stocks shed less than half a per cent.

Gold rose as physical consumers like jewellers took advantage of lower prices to buy into the precious metal,and as China announced moves to allow greater freedom in its gold trade.

Oil prices extended three-month highs towards $82,tracking gains in Asian equities.