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Asia Stocks Rise for 6th Day on Prospects Supporting Valuations

Asia Stocks Rise for 6th Day on Prospects Supporting Valuations

(Bloomberg) -- Asian stocks climbed for a sixth day, extending the best start to a year since 2006, on optimism corporate earnings and economic growth prospects in the region support valuations at the highest level in almost three years. Japanese shares rose after the market reopened from a holiday.

The MSCI Asia Pacific Index added 0.1 percent to 180.12 as of 5:13 p.m. in Hong Kong, heading for a fresh record close with real estate and material companies leading the advance. Japan’s Topix index extended its climb to its highest close since June 1991. The Philippine Stock Exchange Index, the region’s biggest gainer, resumed its rise to a record after the government indicated fourth-quarter economic growth probably surpassed the previous three months, while Hong Kong’s Hang Seng Index capped its longest winning streak this century.

“Investors are betting that a synchronized global economic upturn will provide tailwinds for earnings and growth prospects in the region," said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. “Given this momentum, there is optimism that valuation is justified and for share prices in Asia to sustain an upward bias before the anticipated U.S. Fed rate increases in the second half.”

This year’s rally has pushed valuations of Asia stocks to 14.4 times estimated 12-month earnings, the highest since April 2015. The multiple was at a low of 11.3 times in February 2016 before Asia equities began their current rally.

Asia Stocks Rise for 6th Day on Prospects Supporting Valuations

Expectations of faster economic growth in Asia has fueled a 3.6 percent rally so far this year in the region’s benchmark equities index, outperforming counterparts in the U.S. and in Europe. It’s the best start to a year since the gauge’s 5.3 percent gain from end-2005 through Jan. 9, 2006.

Still, this year’s rally may be headed for a pause as the gauge’s 14-day relative-strength index has climbed to 82.9, the highest since Nov. 9, and above the 70 level some traders regard as an overbought signal.

South Korea’s Kospi halted a two-day rally as Samsung Electronics Co. declined after fourth-quarter earnings missed analysts’ estimates. The index reversed earlier gains spurred by detente signs from Seoul and North Korea’s first high-level meeting in more than a decade.

Summary

  • Topix index +0.5%; Nikkei 225 +0.6%
    • Japanese Stocks Extend Highs Amid Gains in Technology Stocks
    • Takeda Reaches 10-Year High as TiGenix Acquisition Seen Positive
  • Hang Seng Index +0.4%; Hang Seng China Enterprises Index +0.2%, Shanghai Composite Index +0.1%, Shenzhen Composite +0.3%
    • Hong Kong Stock Index Heads for Best Winning Streak This Century
    • China Big Cap Stocks Extend Rally to Eighth Day as Moutai Climbs
  • Taiex little changed
    • CS Cuts Taiwan IPhone Component Maker Targets on Lukewarm Demand 
  • Kospi -0.1%; Kospi 200 -0.3%
    • Samsung Elec. Falls Most in 2 Weeks After 4Q Earnings Miss Est.
  • S&P/ASX 200 +0.1%, New Zealand’s S&P/NZX 50 +0.1%
    • Australian Pharmacy Operators Fall as Codeine Restrictions Near
  • Straits Times Index +0.4%; Malaysia’s KLCI -0.3%; Jakarta Composite Index -0.2%; Philippine Stock Exchange Index +2%; Vietnam’s VN-Index +0.7%, Thailand’s SET Index -0.2%
    • Indonesian Stocks Retreat From Record After Warnings About GDP
  • India’s Sensex +0.2%, poised for 4th day of gains; SGX Nifty 50 Index little changed
    • Sensex Extends Record Rally as Coal India Climbs Most in 2 Years

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Margo Towie

©2018 Bloomberg L.P.