Asian Stocks Jump Most Since November Before Yellen Testimony

A gauge of Asian stocks outside Japan rose, heading for its biggest advance since November, before Federal Reserve Chairman Janet Yellen delivers her first testimony on monetary policy.

Zijin Mining Group Co. (2899), China’s biggest gold producer, jumped 8.1 percent in Hong Kong as the bullion’s price headed for the longest rally since August. Australia & New Zealand Banking Group Ltd., Australia’s third-largest bank by market value, added 2.2 percent after posting a 13 percent jump in first-quarter cash profit. Tata Motors Ltd. climbed 2.3 percent in Mumbai, rising for a sixth day, after India’s biggest automaker posted quarterly profit that beat analyst estimates.

The MSCI Asia Pacific excluding Japan Index advanced 1.2 percent to 449.70 as of 3 p.m. in Hong Kong. The regional gauge has climbed 3.4 percent from a five-month low on Feb. 5 as equities rebounded from a global rout. Yellen will speak on monetary policy and the outlook for the economy today for the first time since being sworn in as the central bank’s head. Japanese markets are closed for a holiday.

“Investors think Yellen is going to be dovish given the recent weakness in U.S. employment numbers,” said Daphne Roth, the Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $207 billion. “The recent selldown looks overdone. Long term investors could start accumulating Chinese shares. Valuations are cheap but investors will have to be mindful that financial conditions might remain tight as the government reins in excessive credit growth.”

The gauge of Asia-Pacific equities outside Japan dropped 5.2 percent in January for its worst start to a year since 2010 amid concern about the Fed’s stimulus cuts, China’s slowdown and volatility in developing markets. Global equity losses in 2014 peaked at $3 trillion on Feb. 4 and have since narrowed to $1.4 trillion, data compiled by Bloomberg show.

China Rally

Hong Kong’s Hang Seng Index (HSI) climbed 2 percent, heading for its biggest advance since Nov. 18. The Hang Seng China Enterprises Index of mainland companies in the city jumped 3 percent, while China’s Shanghai Composite Index rose 0.8 percent.

The Hang Seng Index dropped to 9.8 times reported earnings at the end of last week, the widest discount versus the MSCI World Index since May 2003, data compiled by Bloomberg show. The gauge fell 7.4 percent this year through yesterday as an official manufacturing index for January signaled a slowdown in the world’s second-largest economy, while the Hang Seng China measure slumped 11 percent.

‘Very Attractive’

“Hong Kong at least for now is very attractive in terms of valuation,” said Lewis Wan, Hong Kong-based chief investment officer at Pride Investments Group Ltd.

Australia’s S&P/ASX 200 Index rose 0.6 percent, extending gains after a private report showed business confidence rose in January for the first time in four months. Home-loan approvals in the country unexpectedly fell 1.9 percent in December from the previous month, while house prices jumped 9.3 percent last quarter from a year earlier, separate reports showed.

New Zealand’s NZX 50 Index advanced 0.3 percent. South Korea’s Kospi index and Taiwan’s Taiex gained 0.5 percent. Singapore’s Straits Times Index rose 0.6 percent and India’s S&P BSE Sensex index added 0.4 percent.

Futures on the Standard & Poor’s 500 Index gained 0.3 percent today. The equity benchmark rose 0.2 percent yesterday, extending gains for a third day, amid optimism that economic growth is robust enough to weather central bank stimulus cuts.

Fed Stimulus

The Fed has already decided to slow the pace of its asset-purchase program twice, reducing its monthly buying of bonds to $65 billion from $85 billion. A Feb. 7 report from the Labor Department showed that payrolls rose by a less-than-projected 113,000 in January, while the unemployment rate unexpectedly dropped to the lowest level in more than five years.

“With U.S. employment data materially deteriorating, there is a building argument that the Fed should ease off tightening monetary conditions,” Gary Dugan, who helps oversee about $53 billion as Singapore-based chief investment officer in Asia and the Middle East for Coutts & Co., the wealth management unit of Royal Bank of Scotland Group Plc, wrote in an e-mail yesterday. “We suspect that Yellen would not want to significantly change policy at her first meeting in March.”

Shares on the MSCI Asia Pacific Index that includes Japan traded at 12.6 times estimated earnings yesterday, compared with 15.3 for the S&P 500 and 13.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Of the 296 companies on the Asian index that have reported quarterly earnings since the beginning of January and for which estimates are available, 52 percent beat profit expectations, according to data compiled by Bloomberg.

Gold Producers

Gold producers advanced as the bullion’s price rose as much as 1 percent, set for a fifth straight daily gain. Zijin Mining climbed 8.1 percent to HK$1.74 in Hong Kong. Newcrest Mining Ltd. (NCM), Australia’s biggest producer of the metal, added 3.1 percent to A$11.45 in Sydney.

ANZ Banking gained 2.2 percent to A$30.56 after saying unaudited cash profit increased 13 percent to A$1.73 billion ($1.55 billion) from a year earlier on higher lending and lower bad debt charges.

Tata Motors climbed 2.3 percent to 372.35 rupees in Mumbai. Net income almost tripled to 48.1 billion rupees ($771 million) in the three months ended December as sales at its Jaguar Land Rover unit jumped, the company said yesterday. That surpassed the 35.1 billion-rupee median of 38 analyst estimates compiled by Bloomberg.

Among shares that dropped, Cochlear Ltd. sank 8.9 percent to A$53.68 in Sydney after reporting first-half results and a second-half estimate that suggest the maker of hearing implants will miss its full-year profit forecast.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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