Asian Stocks Heading for Six-Week High as Japan Climbs

Asian stocks advanced, with the regional benchmark gauge ending at a six-week high, as telecommunications companies led gains. Japanese shares rose after the yen weakened and an advisory committee said the world’s largest pension fund doesn’t need a domestic-bond focus.

SoftBank Corp. jumped 4.8 percent in Tokyo as the mobile carrier contributed the most to the regional benchmark’s advance. Myer Holdings Ltd. (MYR), Australia’s largest department-store operator, added 1.5 percent in Sydney after the nation’s retail sales in January climbed the most in a year. Tencent Holdings Ltd., the world’s best-performing major technology stock in the past five years, increased 2 percent in Hong Kong to a record close.

The MSCI Asia Pacific Index rose 0.9 percent to 138.89 as of 8:28 p.m. in Hong Kong, with almost three shares rising for each that fell. Japan’s 128.6 trillion yen ($1.26 trillion) Government Pension Investment Fund should seek yearly returns of 1.7 percent plus the rate of pay increases for workers, according to a draft report from the committee tasked with helping the health ministry decide on economic assumptions for investment targets.

“I think pension funds are moving in the right direction because they have been too risk averse,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11 trillion yen ($107 billion) in assets. “It’s not a bad thing they are going to take risk, but we need to be ready for higher volatility in assets.”

Yen Weakens

Japan’s Topix index rose 1.3 percent as the yen slid a third day. SoftBank added 4.9 percent to 7,959 yen. Hong Kong’s Hang Seng Index added 0.5 percent, with Tencent climbing 2 percent to HK$635. South Korea’s Kospi Index gained 0.2 percent, and New Zealand’s NZX 50 Index advanced 0.8 percent, extending a record high.

Australia’s S&P/ASX 200 Index (AS51) closed little changed, near a 5 1/2-year high. The gauge pared losses of as much as 0.4 percent after retail sales in January rose three times faster than economist estimates and the trade surplus widened to the most in 2 1/2 years. Myer advanced 1.5 percent to A$2.66.

The Shanghai Composite Index added 0.3 percent, halting a two-day drop. Finance Minister Lou Jiwei said economic growth below the government’s target is acceptable, with employment, not the exact level of expansion, being key.

Premier Li Keqiang yesterday kept the annual growth target unchanged at 7.5 percent for 2014, stoking speculation the government will allow the country’s $21 trillion debt mountain to swell. Investors are watching the National People’s Congress for clues to the next steps to fix local-government finances, rein in shadow banking and open state businesses to private investment.

Credit Risks

The growing risk of default by Shanghai Chaori Solar Energy Science & Technology Co. may become China’s “Bear Stearns moment,” prompting investors to reassess credit risks as they did after the U.S. securities firm was rescued in 2008, according to Bank of America Corp. The maker of solar cells said March 4 it may not be able to make an 89.8 million yuan ($14.7 million) interest payment in full by tomorrow’s deadline.

There’s no need to panic about a default, which is “normal volatility” in the bond market, the China Securities Journal reported, citing Li Daokui, a former adviser to the People’s Bank of China. Local government debt defaults are more of a concern because there would be a larger-scale impact, Li said, according to the newspaper.

The MSCI Asia Pacific Index climbed 6.7 percent from this year’s low on Feb. 4. The gauge traded at 13.1 times the estimated earnings of its constituent companies, compared with 15.9 for the Standard & Poor’s 500 Index and 14.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Ukraine Crisis

European Union leaders will consider repercussions for Russia at an emergency meeting today on the Ukraine crisis, after Russia’s foreign minister fended off a U.S. effort to ease tensions in the Crimean peninsula. Western nations are threatening Russia with sanctions over its military intervention in Crimea while pursuing diplomacy in an effort to defuse the situation.

Futures on the S&P 500 gained 0.2 percent after the U.S. equities benchmark fell less than one point to 1,873.81 in New York.

Among other stocks that moved today, Kumiai Chemical Industry Co. surged 8.4 percent to 594 yen after reporting that first-quarter net income doubled.

Renewable Energy

China’s renewable energy producers advanced after Premier Li said the government will encourage the use of alternative energy sources to combat pollution. Xinjiang Goldwind Science & Technology Co. (2208), the nation’s largest maker of wind turbines, jumped 7.2 percent to HK$9.74. China High Speed Transmission Equipment Group Co. surged 10 percent to HK$6.50 even after saying it expects full-year profit to slide.

Standard Chartered Plc, a U.K.-based lender that relies on Asia for most of its revenue, slid 1.3 percent to HK$162.30 after posting its first annual profit decline in a more than a decade.

Prada SpA (1913) declined 1.8 percent to HK$56.05. Shares of the fashion house fell after Finance Minister Lou said China will impose higher taxes on luxury goods.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; 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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