Asian Stocks Headed for Biggest Advance Since September

Asian stocks rose, with the regional benchmark index headed for its biggest gain in nine months, amid signs the Japanese and U.S. economies are improving and assurances on stimulus efforts by the Federal Reserve.

Toyota Motor Corp. (7203), the world's biggest carmaker, rose 1.5 percent, pacing gains among Japanese exporters as the yen weakened. Mitsubishi UFJ Financial Group Inc., Japan's No. 1 lender, climbed 4.1 percent after the nation's industrial output and retail sales beat expectations. China Overseas Land & Investment Ltd., the largest mainland property company traded in Hong Kong, rose 4.6 percent on speculation the government will remove a ban on refinancing for real-estate development.

The MSCI Asia Pacific Index climbed 2 percent to 130.84 as of 5:29 p.m. in Tokyo, heading for its biggest advance since Sept. 14, a day after Fed Chairman Ben S. Bernanke unveiled a third round of quantitative easing to boost the U.S. economy. The gauge is headed for a second month of losses and its first quarterly slump in a year after China's money-market rates surged to a record and Bernanke said this month policy makers may start dialing down U.S. stimulus.

"The U.S. is recovering, but the rate of growth isn't matching expectations," Peter Esho, investment adviser in Sydney at Wilson HTM Investment Group, which oversees about $11.8 billion, said in a telephone interview. "The Fed know what's happening on the ground, so I think they will act within reason. The Japanese government is very serious about getting their economy back to a reasonable rate of growth. Japan will continue to surprise on the upside over the next few years."

Shares on the Asia-Pacific gauge traded at 12.5 times average estimated earnings, compared with 14.6 for the Standard & Poor's 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Relative Value

Japan's Topix index rose 3.2 percent and the benchmark Nikkei 225 Stock Average jumped 3.5 percent, extending gains for a second week. Reports today showed the economy strengthened in May as industrial production rose the most since 2011, retail sales climbed and consumer prices halted a six-month slide, bolstering Prime Minister Shinzo Abe's push to end a deflationary malaise.

A survey published by the Nikkei newspaper this week found 55 percent of respondents approved of Abe's economic policies, and 66 percent supported the cabinet. The paper surveyed 918 people by telephone between June 21-23 and did not give a margin of error.

Taiwan's Taiex index added 2.3 percent, capping the gauge's biggest gain since Nov. 23, as chipmakers advanced. The index rose the past three days after Taiwanese lawmakers voted this week to roll back provisions of a capital gains tax on stock sales of more than NT$1 billion ($33 million).

'Rock Bottom'

China's Shanghai Composite Index (SHCOMP) rose 1.5 percent, its first advance in eight days, ahead of the release of the June manufacturing purchasing managers' index next week. Fitch Ratings yesterday cut its 2013 growth forecast for the world's second-largest economy on concern a surge in money market rates will curb demand.

"The Chinese market is close to a turnaround as sentiment is at rock bottom," HTM Investment's Esho said. "Even if there are issues around the financial system, there might be short-term fixes from the government."

Hong Kong's Hang Seng Index advanced 1.8 percent, while the Hang Seng China Enterprises Index of mainland companies gained 1.7 percent. South Korea's Kospi index gained 1.6 percent. Singapore's Straits Times Index increased 1.2 percent. New Zealand's NZX 50 Index rose 0.5 percent, while Australia's S&P/ASX 200 Index lost 0.2 percent.

U.S. Economy

Futures on the Standard & Poor's 500 Index rose 0.3 percent. The gauge yesterday advanced 0.6 percent, completing its biggest three-day rally since January, as reports showed consumer spending rebounded, pending home sales soared to the highest level since 2006 and jobless claims declined last week. Fed Bank of New York President William C. Dudley said the central bank may prolong its asset-purchase program should the economy fail to meet the Fed's forecasts.

Japanese exporters gained as the yen fell against the dollar for a second day. A weaker yen boosts the value of overseas income at carmakers and electronics manufacturers when repatriated.

Toyota gained 1.5 percent to 5,990 yen in Tokyo. Honda Motor Co., a Japanese carmaker that gets about 83 percent of sales overseas, rose 2.2 percent to 3,685 yen. Panasonic Corp., Japan's second-biggest television maker, jumped 6.7 percent to 797 yen.

Japanese lenders advanced. Mitsubishi UFJ climbed 4.1 percent to 612 yen. Sumitomo Mitsui Financial Group Inc. (8316), the nation's second-largest lender by market value, rose 2.9 percent to 4,550 yen. Mizuho Financial Group Inc. gained 4.6 percent to 206 yen.

India Gas

India's biggest energy companies rose after the government agreed to raise the price of natural gas. Reliance Industries Ltd., operator of the world's biggest oil refining complex, climbed 3.1 percent to 855.2 rupees in Mumbai. Oil & Natural Gas Corp. (ONGC) added 1.7 percent to 325.70 rupees.

Chinese developers rallied after 21st Century Business Herald reported real-estate companies may be able to apply for fundraising and restructuring without completely spinning off their property units. Companies may be allowed to sell new shares and bonds to ease the cash crunch in the world's second-largest economy, said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million.

China Overseas Land rose 4.6 percent to HK$20.35 in Hong Kong, and Guangzhou R&F Properties Co., a builder in the southern Chinese city, gained 3.9 percent to HK$11.22. China Resources Land Ltd. (1109), the second-biggest mainland developer traded in Hong Kong, gained 4.2 percent to HK$21.20.

Sands China Ltd., a Macau casino operator controlled by billionaire Sheldon Adelson, added 1.1 percent to HK$36.55 in Hong Kong. The company's business is expected to be "very strong" going forward and the second half is traditionally better than the first, Sands China Chief Executive Officer Edward Tracy said. Mainland China holidays in the latter half of the year will boost growth, he said.