Asian stocks rise on positive US data

Encouraging US jobs and consumer data indicating the recovery in the world's largest economy propelled the stocks on Asian bourses yesterday to close higher.

Japan's benchmark Nikkei added 2.09 per cent and showed six-week highest close since January 22, while MSCI index of Asian shares outside Japan rose 1.6 per cent.

Japan stocks rose as exports went up on a weaker yen and resource shares lifted by rises in commodity prices, building on sentiment from better-than-expected US jobs data.

Nikkei index added 216.96 points to close at 10585.92 points, while Hang Seng index rose 1.76 per cent or 70.88 points and closed at 4102.12 points. India's Bombay Stock Exchange (BSE) Sensex moved up marginally 0.64 per cent to close above 17102.60 points, netting a gain of 108.11 points. Chinese Shanghai composite Index rose 0.73 per cent or 22.17 points to close at 3053.23 points. "Asian stocks are likely to outperform other global markets in the coming months thanks to stronger earnings growth," said Andrew Pease, Senior Investment Strategist, Asia-Pacific, for Russell Investment and author of the Russell Asia Market Commentary.

Pease says that although Asia's (ex-Japan) price-to-earnings ratio, relative to other markets, was high by historic standards, it could be justified by stronger medium-term growth prospects.

"In terms of asset class valuation, we see world equities as broadly fairly valued, but we believe Asian equities have more profit potential," Pease said. "At 12.5 times, Asia's forward PE ratio is spot on the 20-year average."

Asian company valuations were generally coming down to attractive levels and buyers were coming back into the market, said Lorraine Tan, director of Asia Equity Research with S&P. She also said there were few other attractive options for investors and with the earnings season in Asia practically over, some uncertainties had been removed.

 

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