Asian Stocks Rise as U.S. Data Overshadow China Slowdown

Asian stocks rose this week after U.S. data and earnings boosted optimism about the world’s biggest economy while further signs of slowdown in China stoked speculation the government will add stimulus to stabilize growth.

The MSCI Asia Pacific Index gained 0.9 percent to 139.16 this week. U.S. industrial production increased more than forecast in March and Federal Reserve Chair Janet Yellen said the central bank remains committed to supporting the recovery.

“Confidence grew about the global economy and that was the No. 1 driver for the market,” said Junya Naruse, chief strategist at Daiwa Securities Group Inc., Japan’s second-largest brokerage. “Shares have yet to start a strong rally, but investors are getting confident that at least downside risk has receded.”

Man Wah Holdings Ltd., a sofa maker that gets half its sales from the U.S., surged 5.9 percent in Hong Kong after saying it expects higher profit. SoftBank Corp., which owns about 37 percent of Alibaba Group Holding Ltd., soared 10 percent in Tokyo after Alibaba’s quarterly profit more than doubled ahead of a planned U.S. initial public offering. CapitaMalls Asia Ltd. jumped a record 21 percent in Singapore after CapitaLand Ltd., Southeast Asia’s biggest developer, offered to buy out investors in its mall unit.

Chinese Shares

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong, also known as the H-share index, dropped 1.4 percent this week. Hong Kong’s Hang Seng Index declined 1.1 percent. The Shanghai Composite Index lost 1.5 percent.

China’s gross domestic product rose 7.4 percent from a year earlier in the January-to-March period, the statistics bureau said on April 16, the weakest pace of expansion in six quarters. Aggregate financing, the broadest measure of new credit, was 2.07 trillion yuan ($333 billion) in March, the People’s Bank of China said on April 15, down from 2.55 trillion yuan a year earlier.

China will lower reserve ratios at “qualified” rural banks in order to provide more funds to agriculture-related industries, according to a statement on the government website yesterday, citing a State Council meeting chaired by Premier Li Keqiang. He also said the nation isn’t considering “strong” stimulus, and reiterated that economic growth a bit higher or lower than 7.5 percent is within a reasonable range.

Japan’s Topix index added 3.5 percent as the yen weakened. The Cabinet Office cut its economic view this month for the first time since Prime Minister Shinzo Abe came to power in 2012, citing the sales-tax increase at the start of the month.

South Korea’s Kospi index gained 0.3 percent. Australia’s S&P/ASX 200 Index advanced 0.5 percent, while New Zealand’s NZX 50 Index added 0.2 percent. Singapore’s Straits Times Index climbed 1.7 percent, and Taiwan’s Taiex Index increased 0.7 percent. Markets in Hong Kong, Singapore, Australia and New Zealand were closed for a holiday yesterday.

U.S. Production

U.S. industrial production climbed 0.7 percent in March after a revised 1.2 percent increase the prior month that was twice as big as previously forecast, figures from the Federal Reserve showed on April 16.

Man Wah jumped 5.9 percent to HK$13.18 after saying it expects a “significant” increase in net income for the 12 months ended March 31.

The Fed has a “continuing commitment” to support the recovery even as policy makers now see the U.S. reaching full employment by late 2016, Yellen said this week. Investors should pay attention to shortfalls in both inflation and the jobless rate for signals on the Federal Open Market Committee’s decisions on the policy rate, she said.

The central bank announced last month a $10 billion reduction in monthly bond buying to $55 billion and repeated that it will taper purchases “in further measured steps.”

The Standard & Poor’s 500 Index increased 2.7 percent this week on signs of strength in the economy as well as earnings reports from General Electric Co. to Morgan Stanley that beat estimates. Tech shares rallied as Yahoo! Inc.’s results were boosted by Alibaba, in which it holds a 24 percent stake.

SoftBank soared 10 percent 7,623 yen after Alibaba posted $1.35 billion in fourth-quarter net income. The jump in profit drove the estimated valuation for China’s largest e-commerce company 9.8 percent higher to $168 billion, based on a Bloomberg survey of analysts. Alibaba last month began the process for a U.S. IPO that may be larger than the $16 billion raised when Facebook Inc. went public in 2012.

CapitaMalls Jumps

CapitaMalls Asia soared 21 percent to S$2.19 after CapitaLand offered to take its shopping-center unit private for about S$3.06 billion ($2.4 billion) to boost shareholder value. Shares of the parent company climbed 8.9 percent to S$3.18.

GungHo Online Entertainment Inc. surged 13 percent to 590 yen in Tokyo after the Nikkei newspaper reported the Internet-game maker’s operating profit rose.

The MSCI Asia-Pacific gauge ended the week trading at 12.65 times estimated earnings, compared with multiples of 15.9 for the S&P 500 and 14.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

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