Sony outlook helps lift Nikkei

Worries about European sovereign debt levels recede

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Asian stocks staged a cautious recovery after Sony, the Japanese technology group, forecast a return to profitability after three years of losses.

Concerns over Europe’s sovereign debt problems failed to ignite the same level of fear in Asia’s equity markets that was seen in Europe on Monday.

The FTSE Asia Pacific index recovered from two-month lows to climb 0.3 per cent to 255.21.

Sentiment was helped by Sony forecasting an operating profit of about Y200bn ($2.4bn) for 2012 after reporting a Y260bn net loss for the last fiscal year.

“Sony shares are down 23 per cent since the quake but, more tellingly, the market cap decline of Y264bn since then looks overdone against the Y164bn quake plus network breach operating profit impact,” said Jeff Loff of Macquarie.

Its shares rallied 2.7 per cent to Y2,270, helping the Nikkei 225 Average advance 0.2 per cent to 9,477.17.

In Seoul, the Kospi Composite index climbed 0.3 per cent to 2,061.76 but the country’s heavily weighted shipbuilding stocks fell after HSBC said it was turning cautious on the sector.

“The stocks are no longer cyclically attractive and we expect order momentum to weaken in the second half, while valuations are stretched,” the broker said.

Hyundai Heavy Industries was downgraded to “neutral” from “overweight” and the shares fell 1.5 per cent to Won434,500.

In Hong Kong, meanwhile, HSBC rated China Rongsheng Heavy Industries at “underweight” and the shares fell 4 per cent to HK$5.10. Hong Kong’s Hang Seng index edged up 0.1 per cent to 22,730.78.

But mainland stocks on the Shanghai Composite fell 0.3 per cent to 2,767.1, a four-month low, after Goldman Sachs said it could not rule out a near-term correction of between 5 and 10 per cent due to easing earnings outlooks.

Goldman analysts downgraded metals producers but kept property stocks as their top picks. Esprit Holdings climbed 1.9 per cent to HK$29.70 while Hang Lung Propertiesadded 1.6 per cent to HK$31.70.

New Zealand’s NZX 50 advanced 0.2 per cent to 3,559.55, led by a 6.8 per cent jump to NZ$2.44 for Telecom Corp after the government said the company would be given the contract to build the majority of the country’s new broadband network, which is planned for completion by 2019.

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