Asian Stocks Advance Before Fed Meeting; Topix Jumps
Asian stocks rose, with the regional benchmark index heading for its biggest two-day advance since September, as investors await this week’s Federal Reserve meeting. Japan’s Topix Index jumped after falling the past four weeks.
GCL-Poly Energy (3800) Holdings Ltd., the largest maker of materials used in solar panels, surged 7.1 percent in Hong Kong on optimism China will boost domestic demand for the alternative energy. Chiyoda Corp. (6366) gained 8 percent in Tokyo after Bank of America Merrill Lynch recommended the industrial builder’s shares. Nomura Real Estate Office (8959) Fund Inc., part-owned by Japan’s No. 1 brokerage, slumped 12 percent after announcing a share sale.
The MSCI Asia Pacific Index climbed 1.2 percent to 132.39 as of 11:47 p.m. in Tokyo, with about three stocks gaining for each that fell. The gauge dropped 3 percent this month through last week amid concern central banks are losing appetite for more economic stimulus. The Hang Seng China Enterprises Index declined for a record 12 straight days through June 14 on concern growth is slowing in the world’s No. 2 economy.
“There are a lot of very interesting opportunities,” Catherine Yeung, Hong Kong-based investment director at Fidelity Investment Management Ltd., which oversees about $248 billion globally, told Bloomberg Television from Singapore. “You do have to be stock-specific across whether its China, Asean or Japan itself. The Fed has to walk a very fine balance. Ultimately, tapering is a good thing because it means the economy is recovering somewhat.”
Singapore’s Straits Times Index and Taiwan’s Taiex Index both climbed 0.7 percent. Hong Kong’s Hang Seng Index advanced 1.2 percent, while the Hang Seng China Enterprises Index gained 0.8 percent. China’s Shanghai Composite Index and South Korea’s Kospi index lost 0.3 percent.
Shares on the MSCI Asia Pacific Index traded at 12.6 times estimated earnings as of June 14, compared with 14.7 times for the Standard & Poor’s 500 Index and 12.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Almost $3 trillion has been erased from global markets since Fed Chairman Ben S. Bernanke said May 22 U.S. policy makers could scale back stimulus efforts if the employment outlook shows “sustainable improvement.” The Federal Open Market Committee will meet this week and announce its interest-rate decision on June 19. All 37 economists surveyed by Bloomberg News predict U.S. borrowing costs will be kept in a zero to 0.25 percent range.
Futures on the S&P 500 Index added 1.2 percent today. The gauge slipped 0.6 percent on June 14 in New York after the International Monetary Fund lowered its 2014 U.S. economic growth forecast to 2.7 percent from 3 percent. The Washington-based lender urged the Fed to carefully manage plans for an exit from stimulus to avoid disrupting markets.
“The Fed will probably make some comments to calm the volatility we’ve seen,” said Chris Green, Auckland-based strategist at First NZ Capital Ltd., a broker and wealth management company. “It’s likely to stick to the September time frame for withdrawing some stimulus, but if there’s any indication that the Fed will withdraw stimulus sooner than expected, then we will see a big reaction.”
The Chicago Board Options Exchange Volatility Index, or VIX (VIX), climbed to an almost four-month high last week as investors scrutinized economic data to determine whether growth is strong enough to prompt the Fed to scale back its asset purchases. A gauge of option prices on the Nikkei 225 fell 6 percent to 39.09 today, indicating traders expect a swing of about 11 percent for the measure in the next 30 days.
Solar energy-related companies rallied after China said it will boost domestic demand for solar-generated electricity and provide easier financing to manufacturers as rising trade tensions slow exports.
GCL-Poly Energy jumped 7.1 percent to HK$2.10 in Hong Kong. Solargiga Energy Holdings Ltd., a Chinese maker of solar wafers, advanced 12 percent to 46 Hong Kong cents.
Chiyoda, a builder of facilities including oil refineries and pharmaceutical plants, climbed 8 percent to 1,140 yen in Tokyo. Merrill Lynch raised its rating to buy from underperform, saying company may seek partners to compete for shale gas projects in the U.S.
Cheung Kong Holdings Ltd., a builder controlled by billionaire Li Ka-shing, rose 3.7 percent to HK$108.60 in Hong Kong. The company and affiliates agreed to buy AVR Afvalverwerking BV for 944 million euros ($1.3 billion), giving it access to waste-processing and renewable-energy assets in Europe.
Cheung Kong Infrastructure Holdings Ltd. increased 3 percent to HK$53.45, while Power Assets Holdings Ltd. gained 3 percent to HK$69.55. Both are participating in the AVR deal.
Among stocks that fell, Nomura Real Estate Office slumped 12 percent to 449,500 yen in Tokyo. The company said on June 14 it plans to raise 35 billion yen ($369 million) to acquire property and repay debt.
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