Asian Stocks Rise as Stimulus Hopes Offset Europe Concern
Asian stocks gained, with the regional benchmark index heading for its biggest weekly advance in almost five months, as optimism that central banks from China to the U.S. will act to stimulate economic growth tempered concerns Europe’s debt crisis will worsen.
Agricultural Bank of China Ltd., the nation’s third-largest lender by market value, climbed 4.1 percent. Esprit Holdings Ltd. gained 9.9 percent in Hong Kong, heading for its first advance in three days, as the clothier said it will continue with its transformation strategy after both its chairman and chief executive officer quit. DeNA Co., Japan’s biggest social- gaming operator, jumped 12 percent in Tokyo after announcing plans to buy back shares.
The MSCI Asia Pacific Index advanced 1 percent to 114.15 as of 7:54 p.m. in Tokyo, with almost two shares rising for each that fell. The measure is heading for a 2.4 percent advance this week, the most since January. The gauge dropped 12 percent from this year’s peak on Feb. 29 through yesterday amid concern growth in the U.S. and China is slowing as Europe’s debt crisis intensifies.
“There’s quite a high chance that the U.S. may do more easing,” said Terrace Chum, a Hong-Kong based fund manager at Manulife Asset Management, which oversees $220 billion. “People are expecting an interest-rate cut in China. There is expectation that Greece may not part from the European Union. But all these could turn around very quickly.”
Australia’s S&P/ASX 200 Index gained 0.4 percent. Hong Kong’s Hang Seng Index climbed 2.3 percent. China’s Shanghai Composite Index added 0.5 percent. South Korea’s Kospi Index fell 0.7 percent.
Trading volumes in Hong Kong were 56 percent higher compared to the 30-day moving average ahead of the June 17 Greek election, data compiled by Bloomberg showed. The polls may determine if the country upholds austerity conditions attached to international aid, or could lead to the first ouster from the euro bloc.
Japan’s Nikkei 225 Stock Average (NKY) closed little changed, erasing gains of as much as 0.7 percent. The Bank of Japan kept the size of its asset-purchase fund unchanged today, as forecast by 13 economists surveyed by Bloomberg News.
Monetary policy makers are already leaning toward greater stimulus a week after China cut borrowing costs for the first time in four years. Bank of England Governor Mervyn King said the central bank will activate a sterling liquidity facility to aid banks, and plans to have a form of credit easing operating to boost lending as the case for looser policy “is growing.”
“We’re likely to see increasing talk from governments about how they can encourage the growth agenda,” said Angus Gluskie, who helps manages more than $350 million at White Funds Management in Sydney. “That will benefit the markets as we move towards the second half of the year. There’s plenty of uncertainty out there. We may still see investors continue to be nervous about Spain and Italy in the aftermath of Greece’s election.”
Chinese lenders and infrastructure companies rallied in Hong Kong after the Economic Information Daily reported China plans to build six new coal-transport railways, citing Wang Mengshu, of the Chinese Academy of Engineering.
Agricultural Bank of China jumped 4.1 percent to HK$3.04 in Hong Kong. China Construction Bank Corp. (939), the nation’s second- biggest lender, gained 2.7 percent to HK$5.28. China Railway Construction Corp. climbed 2.7 percent to HK$6.07.
Energy producers led gains among the 10 industry groups in the MSCI Asia Pacific Index as crude futures headed for a second day of advance. Cnooc Ltd., China’s largest offshore oil producer, jumped 3.8 percent to HK$15.20 in Hong Kong. Woodside Petroleum Ltd. added 1 percent to A$32.35 in Sydney.
Futures on the Standard & Poor’s 500 Index added 0.3 percent today. The gauge climbed 1.1 percent in New York yesterday on heightened speculation the Federal Reserve, which meets for two days from June 19, will act to stimulate growth as more Americans applied for jobless benefits and consumer prices dropped.
Hon Hai Precision Industry Co. (2317), the assembler of Apple Inc.’s iPads, climbed 2.9 percent to NT$84.50 in Taipei. Quanta Computer Inc., the world’s largest contract manufacturer for laptop computers, added 1 percent to NT$79.90. Techtronic Industries Co., which makes Ryobi power tools and counts North America as its biggest market, gained 1.1 percent to HK$9.07 in Hong Kong.
Esprit jumped 9.9 percent to HK$10.14, rebounding from a two-day 32 percent slump triggered by the resignations of CEO Ronald Van der Vis and Chairman Hans-Joachim Koerber. No strategic changes are planned to the clothier’s transformation program, though some “adjustments” are possible, Van der Vis said on the call yesterday.
DeNA surged 12 percent to 1,993 yen Tokyo after saying it will spend as much as 20 billion yen ($252 million) buying back as much as 10 percent of its stock.
The MSCI Asia Pacific Index (MXAP) lost 0.8 percent this year through yesterday, compared with a 5.7 percent advance by the S&P 500 and a 1.1 percent drop on the Stoxx Europe 600 Index. Shares on the Asian benchmark are valued at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
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