Wednesday, Apr 13, 2011

SINGAPORE (Dow Jones)--Asian stock markets were higher Wednesday with banks and property stocks leading gains in China on attractive valuations.

Japan's Nikkei Stock Average was up 0.9%, Australia's S&P/ASX 200 was up 0.3%, and South Korea's Kospi Composite was up 1.6%. Hong Kong's Hang Seng Index added 0.7%, while the Shanghai Composite added 1% to 3050.40.

Dow Jones Industrial Average futures were up 55 points in screen trade.

Gains by banks and property developers helped lift the Chinese market to a five-month high as their valuations remained attractive, after a recent consolidation, compared with other sectors.

"The market is set to gain further as banks' valuations remain at a relatively low level, trading at 9 times their estimated 2011 earnings, compared with an average of around 15 times for the broader market," said China Development Bank analyst Li Xin.

Agricultural Bank of China rose 2.1% after dropping 1.1% Tuesday, and China Minsheng Banking Corp. rose 2.2% after falling 1.2% in the previous session.

Among developers, Beijing Urban Construction Investment & Development was up 2.3% following a 6.5% decrease in the previous two sessions, and Poly Real Estate Group was 2.2% higher after falling 3.8% over the same period.

In Hong Kong, local property developers were up tracking gains by their mainland peers.

Henderson Land rose 2.7% after the company announced Tuesday that Chairman Lee Shau-kee paid HK$10 billion to exercise warrants for the subscription of 172.414 million shares in the developer at HK$58 each. Lee has made a number of share purchases in Henderson since the developer announced its full-year results in March 17.

Wharf Holdings gained 2.1% and Cheung Kong added 0.6%.

Foxconn International Holdings rose 2.8% to HK$4.84 after the Financial Times reported Wednesday that its parent Foxconn Technology Group is considering $12 billion of investments in Brazil, citing Brazil President Dilma Rousseff.

A weaker yen and bargain-buying helped bolster Japanese stocks amid choppy trading after Tuesday's 1.7% fall.

Overall sentiment is still cautious and risk-averse," said Takuya Yamada, a senior portfolio manager at ITC Investment Partners.

Renesas Electronics jumped 7.6% on a Nikkei report the company will restart production at a quake-crippled plant one month ahead of schedule.

"This is a big deal as Renesas is a huge supplier and major auto makers depend on it," said Tsuyoshi Segawa, equity strategist at Mizuho Securities.

There were fears that global production could be hobbled if the shutdown of the plant, which makes a quarter of the company's auto microcontrollers, were prolonged.

Auto makers, which rely on Renesas for microcontrollers, were also boosted by the report, with Honda Motor rising 3.3% and Toyota Motor Corp. closing 1.4% higher.

Shares of Tokyo Electric Power, operator of the stricken nuclear power plant at the center of the current nuclear crisis in Japan, closed up 12% in another heavy-volume session.

Around the region, energy stocks lost ground amid a sharp drop in crude-oil prices after negative comments from Goldman Sachs.

May Nymex crude-oil futures were up 36 cents at $106.61 a barrel on Globex, after falling 3.3% Tuesday in U.S. trade.

Goldman Sachs said Tuesday it no longer recommends long positions in oil futures in the near term, forecasting a "substantial pullback" for Brent crude: "We remain cognizant of the risks posed by potential further political contagion in the Middle East and North Africa, but we believe this risk is increasingly balanced by the likelihood that the oil market will experience a correction."

Australia's Oil Search shed 1.9%, Tokyo-listed Inpex fell 1.6%, and Hong-Kong-listed Cnooc fell 0.3%.

Despite the pullback in commodity plays, Australian shares ended higher, as most sectors outperformed with banks up 0.7%-1.5%, Westfield up 1.9%, Telstra up 1.4%, Macquarie Group up 1.7%, QR National up 2.4% and Transurban up 3.0%.

The Australian market is tracking Tokyo after Tuesday's sell-off on the nuclear crisis," said BBY senior institutional trader Peter Copeland. "We factored in the bad news yesterday. Goldman Sachs's change of view on commodities has had an effect on materials and energy stocks."

In South Korea, auto stocks were up sharply on hopes for strong 1Q earnings and higher global market share this year, analysts said; Hyundai Motor was up 6.3% and Kia Motors was up 4.6%.

Among other markets, New Zealand's NZX-50 rose 0.2%, Singapore's Straits Times Index added 1.1%, Taiwan's Taiex added 0.6% and Philippine shares edged up 0.1%. Thailand's market was closed for a holiday. India's Sensex tacked on 2.4% while Malaysia's KLCI rose 0.6% and Indonesia's main index added 0.4%.

In foreign-exchange markets, the yen weakened against the euro and the U.S. dollar. The dollar was at Y84.05 compared with Y83.59 in late New York trade Tuesday, while the euro was at Y121.82 against Y120.98. Against the dollar, the euro was at $1.4496 versus $1.4478.

"It looks like the yen-buying spree based on risk aversion has waned and the pair is now testing the upside amid the absence of bad news here," said Yuichiro Harada, senior vice president at forex division at Mizuho Corporate Bank.

Spot gold was at $1,457.50, up $3.80 from its New York settlement Tuesday.

-Dow Jones Newswires; +65-6415-4140; markettalk@dowjones.com

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(END) Dow Jones Newswires

April 13, 2011 06:08 ET (10:08 GMT)