Asian Stocks Post Biggest Weekly Advance in 2012 on Fed Stimulus

Asian stocks gained this week, with the regional benchmark index posting its biggest weekly advance since December, after the Federal Reserve said it will buy mortgage-backed securities to bolster economic growth.

Sony Corp., Japan’s biggest electronics exporter, climbed 8.3 percent in Tokyo. BHP Billiton Ltd. (BHP), the world’s biggest mining company and Australia’s No. 1 oil producer, increased 4.2 percent in Sydney as commodities gained. Fraser & Neave Ltd. rose 7 percent to a record high in Singapore after Thai billionaire Charoen Sirivadhanabhakdi offered to buy the rest of the developer and brewer for S$9 billion ($7.4 billion).

“The Fed move has provided the market a shot in the arm,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., oversees about $124 billion. “This should help keep mortgage rates low and boost the housing sector. While there are still constraints to U.S. growth, the Fed has pledged to keep stimulating the economy until the labor market improves.”

The MSCI Asia Pacific Index advanced 3.8 percent this week to 123.60, the most since the period ended Dec. 2. It rose 5 percent through yesterday this quarter amid speculation U.S., China and Europe will step up efforts to support economic growth. The Asian benchmark traded at 12.8 times estimated earnings, compared with 14.2 for the Standard & Poor’s 500 Index (SPXL1) and 12.3 for the Stoxx Europe 600 Index.

Combating Slowdown

South Korea’s Kospi index gained 4 percent as data showed the nation’s exports and imports increased in August from July and brokerages surged. Japan’s Nikkei 225 Stock Average rose 3.2 percent. Australia’s S&P/ASX 200 advanced 1.5 percent.

Hong Kong’s Hang Seng Index jumped 4.2 percent, while China’s Shanghai Composite Index slid 0.2 percent amid warnings that investors shouldn’t expect the same sort of massive stimulus that accompanied the last economic downturn in 2008.

The MSCI Asia Pacific Index yesterday rallied to its highest close since May 4 after the Fed said on Sept. 13 it will conduct open-ended purchases of $40 billion of mortgage debt a month and pledged to keep federal fund rates near zero “at least through mid-2015.”

“The Fed’s statement made clear that this monetary easing will go on until employment growth is satisfactory,” said Akio Yoshino, chief economist in Tokyo at Amundi Japan Ltd., whose global parent has $897 billion of assets under management. “This time around we have a clear link between the economy and monetary policy, and that’s a very big thing. It should give powerful support for markets to appreciate.”

Exporters to the U.S. climbed for the week. Sony increased 8.3 percent to 983 yen in Tokyo. James Hardie Industries SE (JHX), the building materials supplier that counts the U.S. as its biggest market, gained 3.5 percent to A$8.95 in Sydney. Li & Fung Ltd., the supplier of clothes and toys to retailers including Wal-Mart Stores Inc., rose 5.9 percent to HK$12.88 in Hong Kong.

Euro Bailout

Companies that do business in Europe rose after Germany’s Federal Constitutional Court cleared the way for a permanent euro-area bailout fund. Canon Inc. (7751), the world’s largest camera maker, added 7.5 percent to 2,783 yen in Tokyo. HSBC Holdings Plc, Europe’s biggest lender, gained 5.5 percent to HK$72.70.

Suppliers to Apple Inc. (AAPL) rallied after the world’s most valuable company unveiled its iPhone 5 on Sept. 12. Samsung Electronics Co., which makes chips for the iPhone and iPad, climbed 6.9 percent to 1.336 million won in Seoul. TDK Corp., a battery supplier to Apple, jumped 7.3 percent to 3,080 yen in Tokyo. Hon Hai Precision Industry Co., which counts Apple as its biggest customer, advanced 9 percent to NT$97 in Taipei.

Materials Surge

Raw material producers and energy companies posted the biggest advance among the 10 industry groups in the MSCI Asia Pacific Index (MXAP) this week. Commodities had the longest run of weekly gains since 2010 as the Fed announced a third round quantitative easing and Chinese Premier Wen Jiabao signaled China can add stimulus to meet growth targets.

BHP rose 4.2 percent to A$33.31 in Sydney. Sumitomo Metal Mining Co., Japan’s top gold producer, surged 20 percent to 1,010 yen. Cnooc Ltd., China’s biggest offshore oil producer, jumped 8.9 percent to HK$15.66.

Massive stimulus measures would hurt China’s long-term growth and the government’s hesitation in making “bold moves” to support the economy is pragmatic, the official Xinhua News Agency wrote in a commentary.

South Korean construction companies advanced after the government announced on Sept. 10 temporary tax cuts to boost the housing market. Hyundai Engineering & Construction Co., the country’s biggest builder, rose 7.6 percent to 70,900 won. GS Engineering & Construction Corp. added 11 percent 82,500 won.

Korean Banks

Lenders also gained in Seoul after Standard & Poor’s upgraded the country’s sovereign debt rating, following similar moves by Fitch Ratings and Moody’s Investors Service. Woori Finance Holdings Co., the nation’s biggest financial group by assets, gained 4.9 percent to 11,800 won. Hana Financial Group Inc. added 3.4 percent to 36,450 won. KB Financial Group Inc. Jumped 5.9 percent to 40,500 won.

Fraser & Neave gained 7 percent to a record high of S$ 8.97, as investors speculated the Singapore-based company may attract a bid higher than the S$8.88 per share offered by Charoen’s TCC Assets Ltd.

Fisher & Paykel Appliances Holdings Ltd. surged 57 percent to NZ$1.175 after Haier Group Corp, China’s biggest appliance maker, offered to buy the rest of the New Zealand-based refrigerator maker for NZ$695 million ($580 million), or NZ$1.20 a share.

Among stocks that fell, Fortescue Metals Group Ltd. plunged 9.7 percent to A$2.99 in Sydney. Australia’s third-largest iron ore producer said on Sept. 13 it’s in talks with lenders for potential changes to debt terms as loan covenants are put under pressure by extended volatility in the metals market.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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