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

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 U.S. and positive economic indicators suggesting the U.S. economy will further expand in 2012 will also help boost the outlook for Chinese exporters to the U.S.

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?

List sorted by average earnings surprise. (Click here to access free, interactive tools to analyze these ideas.)

1. Silicon Motion Technology (Nasdaq: 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 March 2011: Reported EPS at 0.18 vs. estimate at 0.13 (surprise of 38.5%). In June 2011: Reported EPS at 0.29 vs. estimate at 0.2 (surprise of 45%). In Sept. 2011: Reported 0.4 vs. estimate at 0.23 (surprise of 73.9%. [Average earnings surprise at 64.35%].

2. Cninsure: 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 March 2011: Reported EPS at 0.24 vs. estimate at 0.23 (surprise of 4.3%). In June 2011: Reported EPS at 0.33 vs. estimate at 0.29 (surprise of 13.8%). In Sept. 2011: Reported 0.33 vs. estimate at 0.18 (surprise of 83.3%. [Average earnings surprise at 27.55%].

3. AutoNavi Holdings Limited: 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 March 2011: Reported EPS at 0.17 vs. estimate at 0.13 (surprise of 30.8%). In June 2011: Reported EPS at 0.21 vs. estimate at 0.18 (surprise of 16.7%). In Sept. 2011: Reported 0.21 vs. estimate at 0.19 (surprise of 10.5%. [Average earnings surprise at 27%].

4. Isoftstone Holdings Limited: 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 March 2011: Reported EPS at 0.1 vs. estimate at 0.08 (surprise of 25%). In June 2011: Reported EPS at 0.13 vs. estimate at 0.12 (surprise of 8.3%). In Sept. 2011: Reported 0.15 vs. estimate at 0.14 (surprise of 7.1%. [Average earnings surprise at 20.82%].

5. NetEase.com (Nasdaq: 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 March 2011: Reported EPS at 0.86 vs. estimate at 0.71 (surprise of 21.1%). In June 2011: Reported EPS at 0.91 vs. estimate at 0.79 (surprise of 15.2%). In Sept. 2011: Reported 0.99 vs. estimate at 0.88 (surprise of 12.5%. [Average earnings surprise at 16.85%].

6. Giant Interactive Group: 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 March 2011: Reported EPS at 0.17 vs. estimate at 0.14 (surprise of 21.4%). In June 2011: Reported EPS at 0.18 vs. estimate at 0.15 (surprise of 20%). In Sept. 2011: Reported 0.19 vs. estimate at 0.16 (surprise of 18.8%. [Average earnings surprise at 16.83%].

7. Focus Media Holding (Nasdaq: 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 March 2011: Reported EPS at 0.3 vs. estimate at 0.27 (surprise of 11.1%). In June 2011: Reported EPS at 0.44 vs. estimate at 0.37 (surprise of 18.9%). In Sept. 2011: Reported 0.59 vs. estimate at 0.47 (surprise of 25.5%. [Average earnings surprise at 16.58%].

8. Spreadtrum Communications (Nasdaq: 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 March 2011: Reported EPS at 0.5 vs. estimate at 0.45 (surprise of 11.1%). In June 2011: Reported EPS at 0.6 vs. estimate at 0.54 (surprise of 11.1%). In Sept. 2011: Reported 0.75 vs. estimate at 0.68 (surprise of 10.3%. [Average earnings surprise at 10.05%].

9. Zhongpin (Nasdaq: 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 March 2011: Reported EPS at 0.47 vs. estimate at 0.45 (surprise of 4.4%). In June 2011: Reported EPS at 0.48 vs. estimate at 0.42 (surprise of 14.3%). In Sept. 2011: Reported 0.46 vs. estimate at 0.45 (surprise of 2.2%. [Average earnings surprise at 8.62%].

10. WNS (Holdings): 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 March 2011: Reported EPS at 0.32 vs. estimate at 0.31 (surprise of 3.2%). In June 2011: Reported EPS at 0.22 vs. estimate at 0.2 (surprise of 10%). In Sept. 2011: Reported 0.26 vs. estimate at 0.24 (surprise of 8.3%. [Average earnings surprise at 7.88%].

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. EPS data source from Yahoo! Finance.

Motley Fool newsletter services have recommended buying shares of NetEase.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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