Asian Stocks Rise on U.S. Optimism, BOJ Easing Prospects

Asian stocks rose, with the regional benchmark headed for the highest close since August 2011, amid confidence U.S. policy makers will reach a budget deal and the Bank of Japan will add to economic stimulus.

Canon Inc., a camera maker that gets 27 percent of its sales in the Americas, gained 6.5 percent. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, jumped 6.1 percent on speculation the BOJ will add monetary easing tomorrow. Whitehaven Coal Ltd. added 8.1 percent in Sydney after confirming it had held talks with China Shenhua Energy Co. Japan’s steelmakers surged on speculation a new government will boost infrastructure spending.

The MSCI Asia Pacific Index gained 1.1 percent to 129.36 at 5:52 p.m. in Tokyo with about four stocks rising for each that fell. Japan’s Nikkei 225 Stock Average advanced 2.4 percent to 10,160.40, the highest since March 28 and the first time it closed above 10,000 since April 3. Volume increased in most Asian markets.

“I think U.S. lawmakers will be able to avoid the worst-case scenario,” said Kazuyuki Terao, chief investment officer of Allianz Global Investors Japan Co., whose parent Allianz SE had more than 1.7 trillion euros ($2.2 trillion) under management as of June 30. “Japan’s new leadership is showing its resolve that the government and the BOJ will join forces to beat deflation. The BOJ is under pressure to change, given its governor is to step down soon.”

Relative Value

Asia’s benchmark equities index has risen 14 percent this year as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.7 times average estimated earnings, compared with 14 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The Nikkei 225 has gained 17 percent since Nov. 14, when the previous government said it would call elections. Shares jumped on expectations the Liberal Democratic Party, which returned to power after losing the vote in 2009, will press for more bond purchases by the BOJ.

Trading volume on the Nikkei 225 and broader Topix Index was almost twice the 30-day average. The MSCI Asia Pacific excluding Japan Index added 0.4 percent today. Australia’s S&P/ASX 200 rose 0.5 percent and New Zealand’s NZX 50 Index increased 1.1 percent. South Korea’s market was closed today for presidential elections.

Hong Kong’s Hang Seng Index added 0.6 percent while China’s Shanghai Composite Index was little changed. Taiwan’s Taiex Index rose 0.4 percent. Singapore’s Straits Times Index was little changed.

Futures on the S&P 500 index rose 0.1 percent today. The gauge rose 1.2 percent yesterday, capping the biggest two-day gain in a month on the benchmark measure.

Budget Talks

President Barack Obama proposed a budget plan that would cut about $1.2 trillion in federal spending and raise a similar amount in taxes in the next decade, according to a person familiar with the talks. House Speaker John Boehner said he will push a budget “plan B” measure that would include tax increases on income of more than $1 million, countering Obama’s proposal while showing willingness to compromise on taxes.

Companies that do business in the U.S. gained, with Canon soaring 6.5 percent to 3,455 yen. Techtronic Industries Co., which generates 72 percent of its sales in North America, added 7 percent to HK$15.38 in Hong Kong. Man Wah Holdings Ltd., a sofa maker that gets more than half its sales in America, added 3.1 percent to HK$6.38.

Japanese shares advanced as the BOJ is forecast to boost monetary stimulus tomorrow after a two-day policy meeting, according to 17 of the 21 analysts surveyed by Bloomberg. The Liberal Democratic Party and coalition partner Komeito have agreed to pass a supplementary budget possibly worth more than 10 trillion yen ($119 billion), the Nikkei newspaper reported.

Bank of Japan

“The Bank of Japan is likely to expand the asset-purchasing program to stimulate and sustain growth momentum” Takahiro Sekido, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the central bank, told Bloomberg Television. “We expect around 10 trillion yen, mainly by JGB purchasing. This kind of policy will encourage yen selling and support overseas investment into Japanese corporates.”

Japanese banks advanced, with Mitsubishi UFJ jumping 6.1 percent to 435 yen. Sumitomo Mitsui Financial Group Inc., the country’s second-biggest lender by market value, rose 4.2 percent to 3,010 yen.

Kobe Steel

Steelmakers had the second-biggest advance of the Topix’s 33 groups today amid speculation the LDP will boost investment in roads and other infrastructure. Kobe Steel Ltd. jumped 13 percent to 103 yen, JFE Holdings Inc. added 5 percent and Nippon Steel Sumitomo Metal surged 6.7 percent to 208 yen.

Whitehaven Coal added 8.1 percent to A$3.47 in Sydney after confirming it talked with China Shenhua but said it hadn’t received approaches to buy assets from the Chinese company or any takeover proposal. Shenhua added 3.2 percent to HK$33.65.

OZ Minerals Ltd., Australia’s third-biggest copper producer, slumped on speculation it will miss its output target this year, said Chris Weston, chief market strategist at IG Markets Ltd. The stock plummeted 9.8 percent to A$6.71.

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