Asian Stocks Rally for Sixth Week on Japan and China Bets

Asian shares rose for a sixth week, the longest winning streak since March, as investors bet governments in Japan and China will do more to spur growth.

Japan’s benchmark indexes capped their best annual advance since 2005 as exporters gained while the yen fell to a more- than-two year low against the dollar on prospects for more stimulus. Mazda Motor Corp. (7261), an automaker that gets 28 percent of its sales in North America, advanced 18 percent in Tokyo this week. Chinese consumer companies rallied, led by department store owner Dashang Group Co. amid speculation China may introduce measures to boost consumption. Tokyo Electric Power Co. slid 8 percent this week after being sued by eight U.S. sailors for radiation exposure.

The MSCI Asia Pacific Index advanced 1.02 percent to 129.61 this week. Japanese shares posted their biggest annual advance since 2005, after a report that the country’s consumer prices fell fanned speculation the central bank will respond to government calls for more asset purchases.

“Central banks are going to keep interest rates low and provide more stimulus that will keep equity markets propped up as it has done this year,” said Kumar Palghat, managing director and founder of Kapstream Capital, which oversees at least $5.2 billion.

Asia’s benchmark equities index rose about 19 percent from this year’s low on June 4 as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.9 times average estimated earnings compared with 13.6 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

U.S. Stocks

The S&P 500 fell 1.9 percent this week as President Barack Obama met with lawmakers to try to reach a budget deal before a January deadline. Obama said after the talks he was “modestly optimistic” Congress can pass a bill to avert more than $600 billion in tax increases and spending cuts.

Japan’s Nikkei 225 Stock Average advanced 4.6 percent this week, taking its advance for the year to 23 percent, the most since 2005. The gauge rose 20 percent since Nov. 14, when the former government said it would hold a general election in December and as a more pro-stimulus Liberal Democratic Party, led by Shinzo Abe, took power.

The rally since November added about $276.3 billion, equivalent to the annual gross domestic product of Malaysia, to the value of Japan’s stocks, according to data compiled by Bloomberg. The country’s markets are shut four days next week for the New Year holidays.

Mazda gained 18 percent to 174 yen. Toyota Motor Corp., Asia’s largest automaker, rallied 5.8 percent to 4,005 yen.

Fuji Heavy

Fuji Heavy industries Ltd., the maker of Subaru vehicles, climbed 5.2 percent to 1,076 yen, the highest close since July 1989, according to data compiled by Bloomberg. The company rose 131 percent this year and is the best-performing stock in the Nikkei 225. Its advance was the biggest by a Japanese member of the MSCI Asia Pacific Index.

Nomura Holdings Inc., Japan’s biggest brokerage, capped a record 12-day winning streak on Dec. 28, rising 17 percent through the week to 503 yen. The stock, the best performer on the Topix Core 30 Index (TPXC30) this year, has more than doubled amid expectations the new government will bolster the economy and speculation that a stock rebound will boost earnings.

“We’ve entered a positive cycle of a weaker yen and higher stock prices,” said Juichi Wako, a senior strategist at Tokyo- based Nomura Holdings Inc. “We’re likely to see more capital flowing in from investors as the risk of not owning Japanese stocks becomes stronger.”

The Shanghai Composite Index, which tracks stocks on the larger Chinese exchanges, added 3.7 percent this week. Hong Kong’s Hang Seng Index increased 0.7 percent, headed for a 23 percent advance this year, the most since 2009.

Consumption Boost

China consumer companies gained after a China Securities Journal report that regulators may introduce measures to boost consumption in areas such as autos, household electronics and solar. Dashang, a mainland department store operator, rallied 13 percent to 35.19 yuan in Shanghai.

Belle International Holdings Ltd., a women’s footwear maker, rose 3.2 percent to HK$16.88. China Unicom (Hong Kong) Ltd., the nation’s second-largest mobile-phone company, advanced 3.1 percent to HK$12.54.

“With China’s new leadership on board there’s some expectation in the market that they will reignite economic growth,” said Alex Au, managing director of Richland Capital Management Ltd. in Hong Kong, which oversees over $200 million. Fund flow into Hong Kong and improving sentiment has been helping the recent gains, Au said. “Some investors are still not convinced about the rally. After all, the global economy is still not in really good shape.”

Final Day

Australia’s S&P/ASX 200 rose 1 percent. New Zealand’s NZX 50 Index gained 0.7 percent in Wellington. South Korea’s Kospi Index added 0.8 percent.

Dec. 28 was the final trading day of the year in South Korea, Taiwan, Indonesia, Thailand, Vietnam and the Philippines. Thailand’s SET Index surged 36 percent this year, the biggest advance by any Asian benchmark gauge after Pakistan’s Karachi 100 Index.

Tokyo Electric Power slumped 8 percent to 206 yen this week, after rallying 47 percent last week. The owner of the power plant which had the world’s biggest nuclear disaster since 1986 is being sued by eight U.S. sailors claiming they were exposed to radiation and the utility lied about the dangers. “We can’t comment as we have not received the complaint document yet,” Yusuke Kunikage, a Tepco spokesman, said by phone Dec. 27.

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.