Recovery optimism boosts Asian indices

Asian stocks rose for a second week, almost erasing the MSCI Asia Pacific Index’s losses this year, as reports on global semiconductor sales, Indian manufacturing and US jobless claims boosted optimism for an economic revival.

Rio Tinto Group, the world’s third-biggest mining company, gained 6.4 percent in Sydney as metal prices climbed on speculation a recovery will boost demand. Li & Fung, the biggest supplier for retailers including Wal-Mart Stores advanced more than 5 percent. Tata Motors surged 12 percent to Rs 794.25. The company said on March 1 that vehicle sales, including passenger cars, surged 58 percent last month. Nomura Holdings Inc. upgraded the stock to buy.

“There’s been quite an abundance of leading indicators pointing to an improving employment backdrop,” said Nader Naeimi, an investment strategist in Sydney at AMP Capital Investors, which oversees about $90 billion globally. “Jobs are key to the sustainability of the recovery.”

India’s Sensitive Index surged 3.4 percent, this week’s biggest advance among benchmarks in the Asia-Pacific region, after reports showed the nation’s exports and manufacturing output climbed.

US, Japan, India
The MSCI Asia Pacific Index rose the most this week on March 5, after a U.S. Labor Department report showed the country’s claims for jobless benefits dropped in the week ended Feb. 27 and the yen weakened against the dollar on speculation the Bank of Japan will further ease monetary policies.

India’s government said on March 2 that the country’s exports rose for a third consecutive month in January, while a report on March 1 showed South Korea’s exports rose for a fourth month in February. A report the same day showed Japan’s unemployment rate unexpectedly fell to a 10-month low in January.

‘Important Themes’
“Recovery in the U.S. economy and further economic expansion in Asia are the important themes,” said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees about $65 billion.

The MSCI Asia Pacific Index surged 34 percent last year as governments worldwide boosted spending and central banks lowered interest rates to help restore economies battered by the global recession. This year, potential gains have been weighed down by concern governments from China to the US and India will tighten lending and withdraw stimulus policies amid signs the recovery is continuing.

The authors are Bloomberg News columnists. The opinions expressed are their own