Asian Bank Stocks Rise as Goldman Sachs Tips HSBC; Toyota Falls

(Bloomberg) -- Asian bank stocks rose as Goldman Sachs Group Inc. recommended investors buy HSBC Holdings Plc. Automakers fell after Toyota Motor Corp. cut its dividend and predicted a second annual loss.

HSBC, Europe’s biggest bank, climbed 3.3 percent in Hong Kong as Goldman Sachs said the company may benefit from possible write-backs as asset markets stabilize. Mitsubishi Corp., Japan’s No.1 trading company, gained 2.4 percent after crude- oil prices climbed on May 8. Toyota, the world’s largest automaker, slumped 5 percent in Tokyo, as it forecast a wider loss than analysts estimated.

“Banks are cyclical shares and investors buy them when they expect the economy to bottom out,” said Hisakazu Amano, who helps oversee about $39 billion at T&D Asset Management Co. “On the other hand, people are getting nervous as they aren’t sure if company profits justify current share prices.”

The MSCI Asia Pacific Index gained 0.4 percent to 98.34 as of 12:30 p.m. in Tokyo. The gauge has rallied 39 percent from a five-year low on March 9 amid mounting confidence the global economy is recovering. The index slumped by a record 43 percent in 2008.

Hong Kong’s Hang Seng Index rose 0.3 percent. Japan’s Nikkei 225 Stock Average lost 0.6 percent. Australia’s S&P/ASX 200 Index dropped 0.6 percent. Other markets in Asia advanced except New Zealand and Singapore.

Futures on the Standard & Poor’s 500 Index lost 0.8 percent. The gauge climbed 2.4 percent as Federal Reserve Chairman Ben S. Bernanke said a review of banks’ financial health should provide “considerable comfort” and a report showing fewer job losses than forecast signaled the worst of the recession is over.

Rising Valuations

The U.S. Labor Department said on May 8 that payrolls dropped by 539,000 last month after a 699,000 loss in March. The two-month rally in equities has driven the average valuation of companies in the MSCI Asia Pacific Index to 27 times reported profit, the highest since March 30, 2004.

“The overall message of the U.S. jobless report is that things are getting better,” said Tomochika Kitaoka, a strategist at Mizuho Securities Co. in Tokyo. “Government aid and a recovery in earnings will put American banks back on their feet.”

HSBC climbed 3.3 percent to HK$68.05 as Goldman Sachs raised its recommendation on the stock to “buy” from “neutral” and its share-price target to HK$84 from HK$55, according to a report today. HSBC may also benefit from a yuan trade settlement program, the report said.

China Citic Bank Co., the nation’s sixth-largest lender by market value, gained 2 percent to HK$4.09. The company will pay parent China Citic Group HK$13.6 billion ($1.8 billion) for control of a Hong Kong banking affiliate.

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