Asian Stocks Rise, Led By Carmakers, Shipbuilders on Earnings

By Chua Kong Ho and Chen Shiyin


Jan. 31 (Bloomberg) -- Asian stocks rose on speculation the region's corporate earnings will withstand a slowdown in the U.S. after Honda Motor Co. raised its forecast and Hyundai Heavy Industries Co. reported a record profit.

Honda, Japan's second-largest automaker, climbed to a three- week high. Hyundai Heavy, the world's biggest shipbuilder, surged the most in four weeks. Seiko Epson Corp. and Esprit Holdings Ltd., the Hong Kong-based apparel retailer, both advanced after reporting higher earnings.

``Our strategy is to stay defensive and pick up selective shares that look cheap and whose earnings look resilient,'' said Teo Chon Kiat, who helps manage the equivalent of $16 billion at DBS Asset Management in Singapore. ``Investors are still concerned about a slowdown in the U.S. and the impact on export growth in the region.''

The MSCI Asia Pacific Index gained 1.8 percent to 143.73 at 3:53 p.m. in Tokyo, reversing an earlier loss of 0.6 percent. All 10 of the benchmark's industry groups advanced. The measure has fallen 8.9 percent this year, headed for its biggest monthly decline since September 2001.

The Nikkei 225 Stock Average Index added 1.9 percent to 13,592.47. South Korea's Kospi Index climbed 2.2 percent, the biggest advance in the region. Australia's S&P/ASX 200 Index had its steepest monthly decline since its history began in 1992.

U.S. stocks fell yesterday for the first time this week on concern that bond insurers guaranteeing $2.4 trillion in securities will lose AAA credit ratings, erasing a rally spurred by the Federal Reserve's interest-rate cut of half a percentage point. MBIA Inc., the world's largest bond insurer, posted today its biggest-ever quarterly loss.

Shipping Lines Gain

Korea Line Corp., South Korea's second-biggest bulk carrier, led the country's shipping lines higher after freight rates rose. Seiko Epson, the world's third-largest maker of inkjet printers, surged the most on record after reporting higher profit. Esprit Holdings, the Hong Kong-based apparel retailer, advanced after posting an increase in first-half profit.

Canon Inc., the world's largest camera maker, dropped in Tokyo after its profit forecast missed analyst estimates. Honda climbed 0.6 percent to 3,320 yen and raised its full-year net income forecast by 7.8 percent because of cost-cuts and higher sales of fuel-efficient cars in the U.S. and Asia.

Daihatsu Motor Co., 51 percent owned by Toyota Motor Corp., jumped 10 percent to 1,082 yen, the highest level since Dec. 26. The Japanese carmaker increased its profit forecast by 25 percent yesterday because of higher sales in Indonesia and Malaysia. Toyota climbed 5.4 percent to 5,820 yen.

Shipbuilders, Shipping Lines

Hyundai Heavy gained 9.1 percent to 312,000 won, rebounding from yesterday's biggest decline since Sept. 12, 2001. The South Korean shipyard reported a 79 percent increase in fourth-quarter profit to a record as it built more vessels to meet trade demand from Asia and Europe. Hyundai Mipo Dockyard Co., an affiliate of Hyundai Heavy, advanced 2.3 percent to 175,500 won, snapping a three-day, 29 percent plunge.

Korea Line soared by the exchange-imposed daily limit of 15 percent to 138,000 won. STX Pan Ocean Co., South Korea's biggest bulk carrier, jumped 15 percent to 1,970 won. Hanjin Shipping Co., the nation's No. 1 shipping line, climbed 9 percent to 32,650 won.

The Baltic Dry Index, a measure of shipping costs for commodities, rose 5.1 percent in London yesterday, its biggest gain in almost two years, after BHP Billiton Ltd. and Baosteel Group Corp. signed a 10-year supply contract for an extra 94 million tons of iron ore.

``The contract proves long-term iron-ore demand is still firm, also for the bulk carriers,'' said Ryu Je Hyun, an analyst at Mirae Asset Securities Co. in Hong Kong, who rates Korea Line as a ``buy.''

Canon Drops

Seiko Epson jumped 16 percent to 2,565 yen, the most since its initial share sale in June 2003, after third-quarter profit increased 40 percent. The stock had the biggest percentage gain on the MSCI World Index.

Esprit added 7.3 percent to HK$100.40 after posting a 37 percent increase in first-half profit.

Canon, also Japan's largest office equipment maker, fell 2.4 percent to 4,580 yen, after the company forecast its slowest annual profit growth this decade, citing weaker U.S. demand.