Asian stocks advanced after oil prices fell from a record and earnings from U.S. retailers rose, renewing optimism consumer spending will bolster growth in the world's largest economy. Sony Corp. and Li & Fung led gains by exporters. Airlines including Qantas Airways Ltd. and Cathay Pacific Airways Ltd. advanced after the drop in oil prices eased concerns of higher fuel costs. ``A lower oil price means less of a burden on consumers and businesses,'' said Khiem Do, Hong Kong-based head of Asian equities at Baring Asset Management (Asia) Ltd., which invests $2.7 billion in the region outside Japan. ``For some exporters, the U.S. is still very, very important. The U.S. economy is still growing.'' He's not changing his holdings yet.
The Morgan Stanley Capital International Asia-Pacific Index, which tracks the performance of more than 900 companies, added 0.6 percent to 85.74 at 1:50 p.m. in Tokyo. Japan's Nikkei 225 Stock Average rose 0.4 percent to 10,727.15. The MSCI benchmark dropped to its lowest since May 20 yesterday, amid concern Americans will spend less on Asian products as higher energy costs erode incomes. Energy prices in the U.S., the largest destination for Asia's exports, rose 11 percent in July from the same month a year ago. All other benchmarks in the region gained, except for those in South Korea, the Philippines and Taiwan. Markets in Indonesia are closed today for a public holiday.
Sony, Li & Fung
Sony, the maker of Vaio computers and Cyber-shot digital cameras, added 1.1 percent to 3,630 yen. Hong Kong-based Li & Fung, which orders Asian goods such as toys and furniture for U.S. importers, climbed 3.7 percent to HK$9.70. Crude oil futures yesterday fell 1.1 percent to settle at $46.05 a barrel in New York, after touching a record $46.91. A victory for Venezuelan President Hugo Chavez in a weekend referendum eased concerns that shipments from the country, the fourth-largest exporter to the U.S., would be disrupted. Oil futures are up 48 percent from a year ago and have set records in all but one session since July 30. Baring Asset's Do expects the oil price to fall to around $40 a barrel by the middle of 2005. Earnings from U.S. retailers Kmart Holdings Corp. and Lowe's Cos. helped lift the Standard & Poor's 500 to its biggest gain since June 7. Kmart, the No. 3 U.S. discount retailer, posted its third-straight quarterly profit. Lowe's, the world's No. 2 home improvement chain, said net income in the second quarter rose 18 percent. Honda Motor Co., which gets 90 percent of its operating profit from North America, rose 1.6 percent to 5,130 yen. Higher fuel costs contributed to a U.S. retail sales report and a consumer confidence index last week missing some economists' expectations.
`Relief'
In Singapore, Chartered Semiconductor Manufacturing Ltd., the world's third-largest supplier of made-to-order chips, advanced 2 percent to S$1.04. The company gets about two-thirds of its sales from the U.S. Qantas, the region's third-largest carrier, gained 1.5 percent to A$3.36. Singapore Airlines Ltd., Asia's most profitable carrier, rose 0.9 percent to S$10.70. Hong Kong's Cathay Pacific, Asia's sixth-biggest airline by sales, gained 2 percent to HK$12.80. A 1-cent increase in the price of aviation fuel adds HK$60 million ($7.7 million) to the carrier's costs. The company last week missed some analysts' estimates for first-half earnings as its fuel bill climbed. Jet fuel typically accounts for about a fifth of airlines' expenses. ``We've all been held hostage by the higher oil prices because it's an additional expense,'' Michael Koh, who helps manage about $47 billion in Asia at JF Asset Management (Singapore) Ltd. ``Everyone desperately wanted relief.''
Mitsubishi Tokyo, DoCoMo
Mitsubishi Tokyo Financial Group Inc. and NTT DoCoMo Inc. led gains in MSCI's Asia Pacific index after Merrill Lynch & Co. added them to its list of recommended Japanese stocks. Mitsubishi Tokyo, Japan's second-largest bank, jumped 4.3 percent to 989,000 yen, while DoCoMo, the nation's largest mobile- phone company, gained 2 percent to 204,000 yen. Mitsubishi Tokyo and DoCoMo were included in the brokerage's ``Japan Focus List'' of stocks that may outperform the broader Topix index in the coming 12 months, Merrill's Satoshi Nojiri wrote in a note to clients late yesterday. The brokerage raised its rating on Mitsubishi Tokyo to ``buy'' from ``neutral'' on Friday, while shares of DoCoMo were upgraded to ``buy'' from ``neutral'' at Merrill on Thursday. South Korea's Hyundai Motor Co. declined, leading the Kospi index lower. The country's biggest carmaker fell 2 percent to 47,650 won after DaimlerChrysler AG, the world's fifth-largest automaker, sold its 10.5 percent stake in the company. ///