Asian Stocks: Can Asian Economies Withstand Europe's Troubles?

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(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. EPS data source from Yahoo! Finance.)

Investors cheered as a three-week high for manufacturing growth in Australia, China and India gave hope that the region’s economies will weather impacts of the sovereign-debt crisis in Europe.

Bloomberg reports the gain have signaled rallies in several companies heavily tied to commerce with China. “The MSCI Asia Pacific Excluding Japan Index gained 2 percent to 400.33 as of 6:59 p.m. in Hong Kong, poised for its highest close since Dec. 8. Almost seven stocks rose for each that fell in the gauge.”

Good News for China

“Chinese lenders and commodity suppliers advanced as manufacturing in India and China improved in December, while Australian output expanded for the first time in six months, separate surveys showed.”

Furthermore, on the news the Chinese government will introduce incentives to boost consumer spending as early as next week, many Chinese appliance retailers and manufacturers have rallied.

An increase in consumer spending in the US and positive economic indicators suggesting the US economy will further expand in 2012 will also help boost the outlook for Chinese exporters to the US.

Business Section: Investing Ideas

Interested in exploring Asian stocks? For ideas, we collected data on earnings surprises.

Companies report an “earnings surprise” when they release quarterly earnings that beat or miss analyst estimates. If a company consistently beats their analyst estimates, it may indicate that the company is persistently being underestimated by the market.

All of the Asian stocks mentioned below have a history of beating analyst earnings estimates.

History suggests these names are being underestimated by top Wall Street analysts–do you think they’ll see more bullish surprises in the future?

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

List sorted by average earnings surprise.

1. Silicon Motion Technology Corp. (SIMO): Operates as a fabless semiconductor company. Incorporated in Taiwan. In Dec 2010: Reported EPS at 0.18 vs. estimate at 0.09 (surprise of 100%). In Mar 2011: Reported EPS at 0.18 vs. estimate at 0.13 (surprise of 38.5%). In Jun 2011: Reported EPS at 0.29 vs. estimate at 0.2 (surprise of 45%). In Sep 2011: Reported 0.4 vs. estimate at 0.23 (surprise of 73.9%. [Average earnings surprise at 64.35%].

2. Cninsure Inc. (CISG): Provides insurance brokerage and agency services, and insurance claims adjusting services in the People's Republic of China. Incorporated in China. In Dec 2010: Reported EPS at 0.37 vs. estimate at 0.34 (surprise of 8.8%). In Mar 2011: Reported EPS at 0.24 vs. estimate at 0.23 (surprise of 4.3%). In Jun 2011: Reported EPS at 0.33 vs. estimate at 0.29 (surprise of 13.8%). In Sep 2011: Reported 0.33 vs. estimate at 0.18 (surprise of 83.3%. [Average earnings surprise at 27.55%].

3. AutoNavi Holdings Limited (AMAP): Provides digital map content and navigation and location-based solutions in the People's Republic of China (PRC). Incorporated in China. In Dec 2010: Reported EPS at 0.12 vs. estimate at 0.08 (surprise of 50%). In Mar 2011: Reported EPS at 0.17 vs. estimate at 0.13 (surprise of 30.8%). In Jun 2011: Reported EPS at 0.21 vs. estimate at 0.18 (surprise of 16.7%). In Sep 2011: Reported 0.21 vs. estimate at 0.19 (surprise of 10.5%. [Average earnings surprise at 27%].

4. Isoftstone Holdings Limited (ISS): Provides various information technology (IT) services and solutions in the Greater China and internationally. Incorporated in China. In Dec 2010: Reported EPS at 0.2 vs. estimate at 0.14 (surprise of 42.9%). In Mar 2011: Reported EPS at 0.1 vs. estimate at 0.08 (surprise of 25%). In Jun 2011: Reported EPS at 0.13 vs. estimate at 0.12 (surprise of 8.3%). In Sep 2011: Reported 0.15 vs. estimate at 0.14 (surprise of 7.1%. [Average earnings surprise at 20.82%].

5. NetEase.com, Inc. (NTES): Engages in the development of applications, services, and other technologies for the Internet in China. Incorporated in China. In Dec 2010: Reported EPS at 0.83 vs. estimate at 0.7 (surprise of 18.6%). In Mar 2011: Reported EPS at 0.86 vs. estimate at 0.71 (surprise of 21.1%). In Jun 2011: Reported EPS at 0.91 vs. estimate at 0.79 (surprise of 15.2%). In Sep 2011: Reported 0.99 vs. estimate at 0.88 (surprise of 12.5%. [Average earnings surprise at 16.85%].

6. Giant Interactive Group, Inc. (GA): Develops and operates online games in the People's Republic of China. Incorporated in China. In Dec 2010: Reported EPS at 0.15 vs. estimate at 0.14 (surprise of 7.1%). In Mar 2011: Reported EPS at 0.17 vs. estimate at 0.14 (surprise of 21.4%). In Jun 2011: Reported EPS at 0.18 vs. estimate at 0.15 (surprise of 20%). In Sep 2011: Reported 0.19 vs. estimate at 0.16 (surprise of 18.8%. [Average earnings surprise at 16.83%].

7. Focus Media Holding Ltd. (FMCN): Operates out-of-home advertising network using audiovisual digital displays in China. Incorporated in Hong Kong. In Dec 2010: Reported EPS at 0.41 vs. estimate at 0.37 (surprise of 10.8%). In Mar 2011: Reported EPS at 0.3 vs. estimate at 0.27 (surprise of 11.1%). In Jun 2011: Reported EPS at 0.44 vs. estimate at 0.37 (surprise of 18.9%). In Sep 2011: Reported 0.59 vs. estimate at 0.47 (surprise of 25.5%. [Average earnings surprise at 16.58%].

8. Spreadtrum Communications Inc. (SPRD): Operates as a fabless semiconductor company that designs, develops, and markets baseband processor and RF transceiver solutions for wireless communications and mobile television markets. Incorporated in China. In Dec 2010: Reported EPS at 0.56 vs. estimate at 0.52 (surprise of 7.7%). In Mar 2011: Reported EPS at 0.5 vs. estimate at 0.45 (surprise of 11.1%). In Jun 2011: Reported EPS at 0.6 vs. estimate at 0.54 (surprise of 11.1%). In Sep 2011: Reported 0.75 vs. estimate at 0.68 (surprise of 10.3%. [Average earnings surprise at 10.05%].

9. Zhongpin, Inc. (HOGS): Engages in the processing and distribution of meat and food products primarily in the People's Republic of China. Incorporated in China. In Dec 2010: Reported EPS at 0.5 vs. estimate at 0.44 (surprise of 13.6%). In Mar 2011: Reported EPS at 0.47 vs. estimate at 0.45 (surprise of 4.4%). In Jun 2011: Reported EPS at 0.48 vs. estimate at 0.42 (surprise of 14.3%). In Sep 2011: Reported 0.46 vs. estimate at 0.45 (surprise of 2.2%. [Average earnings surprise at 8.62%].

10. WNS (WNS): Provides offshore business process outsourcing (BPO) services. Incorporated in India. In Dec 2010: Reported EPS at 0.33 vs. estimate at 0.3 (surprise of 10%). In Mar 2011: Reported EPS at 0.32 vs. estimate at 0.31 (surprise of 3.2%). In Jun 2011: Reported EPS at 0.22 vs. estimate at 0.2 (surprise of 10%). In Sep 2011: Reported 0.26 vs. estimate at 0.24 (surprise of 8.3%. [Average earnings surprise at 7.88%]. 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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