Asian Stocks Rise, Extend Weekly Gain, on Japan Stimulus

Most Asian Stocks Rise, Extend Weekly Advance, on U.S. Budget
Signage for BHP Billiton Ltd. is displayed atop the Brookfield Place Tower in Perth, Australia. Photographer: Sergio Dionisio/Bloomberg

Asian stocks rose, with the benchmark regional index heading for its second weekly advance, as Japan’s cabinet approved an economic stimulus package and the country’s industrial production unexpectedly increased.

Nissan Motor Co., which gets 79 percent of its sales outside Japan, gained 0.9 percent as the yen dropped to a seven-month low against the euro. Rio Tinto Group rose 2.8 percent in Sydney as JPMorgan Chase & Co. said the mining company’s plan to cut costs by $5 billion may boost shareholder returns. Mitsubishi Heavy Industries Ltd. and Hitachi Ltd. rose after agreeing to merge thermal-energy businesses.

The MSCI Asia Pacific Index gained 0.3 percent to 124.54 as of 6:54 p.m. in Tokyo, with more than twice as many shares rising as falling. The gauge has advanced 1.4 percent this week. Japan’s Nikkei 225 Stock Average rose 0.5 percent today, capping its best month since February, as the government boosted stimulus measures ahead of elections that polls suggest will be won by an opposition party calling for unlimited monetary easing until a 2 percent inflation goal is reached.

“If the Bank of Japan is forced to become even looser, the yen will be potentially even weaker, and that’s relatively good news for exports,” Andrew Freris, chief investment adviser for Asia at BNP Paribas Wealth Management, told Bloomberg TV today. “Being elected in December, they are not going to have the time to do anything really dramatic, except looser monetary policy.”

Japan Stimulus

Japan’s cabinet today approved a second round of fiscal stimulus worth 880 billion yen ($10.7 billion) using budget reserves as Prime Minister Yoshihiko Noda attempts to boost the economy before next month’s election. The yen weakened against all of its 16 major peers. Nissan added 0.9 percent to 799 yen.

Australia’s S&P/ASX 200 Index advanced 0.6 percent as Rio Tinto climbed 2.8 percent to A$58.75. South Korea’s Kospi Index slid 0.1 percent.

Hong Kong’s Hang Seng Index gained 0.5 percent and China’s Shanghai Composite Index added 0.9 percent. Confidence in China’s economy is at the highest level in more than a year amid optimism that the new leadership headed by Xi Jinping will be better for the financial climate, according to a Bloomberg investor poll. Over half of 862 Bloomberg global customers polled said they were more optimistic about the effect of Xi’s policies on investors, up from 42 percent of those asked in September about President Hu Jintao.

Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The S&P 500 gained 0.4 percent yesterday.

U.S. Treasury Secretary Timothy Geithner offered Republican House Speaker John Boehner a proposal to avert an end-of-the-year fiscal cliff that would trade $1.6 trillion in tax increases for $400 billion in unspecified entitlement program cuts, a Republican aide said.

Debt Limit

The proposal calls for a permanent increase in the U.S. debt limit that would avoid the need for congressional action, said the aide, who wasn’t authorized to speak publicly. Boehner said he remains “hopeful” about talks to avert more than $600 billion in spending cuts and tax increases scheduled to begin in January.

“The market can go higher even if U.S. lawmakers drag out budget discussions all the way to the last minute,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “They will not let the U.S. economy shrink. There’s a lot of room for negotiation and compromise.”

Relative Value

The MSCI Asia Pacific Index rose 14 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur growth and data showed a slowdown in China may be ending. The gauge traded at 14 times estimated earnings, compared with 13.6 times for the S&P 500 and 12.5 times for the Stoxx Europe 600 Index.

Mitsubishi Heavy gained 3 percent to 383 yen and Hitachi advanced 4.2 percent to 476 yen. The companies, two of Japan’s largest manufacturers, agreed to merge businesses with combined sales of 1.1 trillion yen ($13 billion). This unites Mitsubishi Heavy’s large-turbine technology with Hitachi’s expertise in smaller models as Japan steps up investment in thermal-power plants following a shutdown of atomic facilities triggered by last year’s Fukushima nuclear disaster.

Northern Star Resources Ltd. slumped 11 percent to A$1.355 in Sydney as the company’s biggest shareholder and other board members sold a combined 10 percent stake in the gold producer.

Hong Kong Exchanges & Clearing Ltd., the world’s No. 2 bourse operator by market value, dropped 0.8 percent to HK$123.80 after saying it’s selling $1 billion in new shares to fund its purchase of the London Metal Exchange.

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