Asian stocks rose this week, with a regional benchmark index paring the biggest monthly slump since May 2010, as exporters and commodity producers climbed on optimism the US and Chinese economies are recovering.
Li & Fung Ltd, a supplier of toys and clothes to Wal-Mart Stores Inc., jumped 4.9 per cent in Hong Kong after US reports showing higher factory orders and consumer spending tempered concern that an economic recovery is faltering. Jiangxi Copper Co. advanced 10 per cent as Chinese manufacturing expanded. Stocks fell September 2 ahead of a US jobs report that showed employment growth stagnated in August, paring the MSCI Asia Pacific Index's greatest weekly gain since March.
"Concern about the health of the US economy was near the top of the laundry list of worries for investors," said Prasad Patkar, who helps manage the equivalent of $1.1 billion at Platypus Asset Management Ltd. in Sydney. "If the data keeps reinforcing the idea that a new recession is unlikely, markets could rally strongly this quarter. The latest manufacturing data confirms that China's economy was never headed for a hard landing."
The MSCI Asia Pacific Index rose 3.2 per cent this week to 124.16, extending last week's 0.7 per cent advance. The gauge tumbled 14 per cent in the previous four weeks as equity indexes in Australia, Hong Kong and Shanghai entered so-called bear markets, tumbling at least 20 per cent from their peaks. The stocks rout was fuelled by concern Europe's debt crisis is worsening and after a US credit rating downgrade by Standard & Poor's.
S&P 500, Stoxx 600
Stocks in the Asian benchmark are valued at about 12.2 times estimated earnings on average, compared with 11.7 times for the S&P 500 and 9.7 times for the Stoxx 600.
Japan's Nikkei 225 Stock Average gained 1.7 per cent this week and South Korea's Kospi Index jumped five per cent. Australia's S&P/ASX 200 Index advanced one per cent in Sydney.