Asian Stocks Gain as China Climbs, Japan’s Topix Hits 2007 High

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Asian stocks rose, led by a jump in Chinese shares amid speculation the government will accelerate mergers among state-owned enterprises. Japan’s Topix index climbed to the highest close since July 2007.

The Shanghai Composite Index advanced 4.9 percent, with 78 stocks, including China Shipbuilding Industry Co. and China United Network Communications Ltd., surging by the 10 percent daily limit. China may combine China Shipping Group and Cosco Group, its two major shipping companies, according to people familiar with the matter. Nissin Foods Holdings Co. gained 5.9 percent in Tokyo after profit rose 35 percent.

The MSCI Asia Pacific Index advanced 0.3 percent to 141.46 as of 4:01 p.m. in Hong Kong. The Shanghai gauge has climbed 7.2 percent this month as authorities took unprecedented steps to shore up markets, including banning stake disposals by major shareholders, suspending initial public offerings and requiring state-run institutions to support the market with equity purchases.

“State-owned enterprise mergers are an investment theme that’s quite certain and there are signs that the move will speed up,” said Li Jingyuan, general manager at Shanghai Zhaoyi Asset Management, who is adding to his stock holdings.

The Chinese government may combine China Shipping and Cosco or merge some of their operations, according to the people, who asked not to be identified because the deliberations aren’t public. The two companies’ listed units including China Shipping Development Co. and China Cosco Holdings Co. were suspended from trading on Monday.

SOE Reform

President Xi Jinping mentioned state-owned enterprise reform on several occasions recently, which may signal top-level design ideas for SOE reform have been formed, China International Capital Corp. analysts led by Hanfeng Wang wrote in a report.

Hong Kong’s Hang Seng fell 0.2 percent while the Hang Seng China Enterprises Index gained 0.5 percent.

Japan’s Topix index rose 0.7 percent to an eight year high. Over 85 percent of companies in the gauge have completed earnings announcements this quarter. Of those for which estimates are available, 63 percent have exceeded profit expectations, an improvement from the 48 percent that beat forecasts last quarter, according to data compiled by Bloomberg.

Australia’s S&P/ASX 200 Index rose 0.6 percent as banks rallied. India’s S&P BSE Sensex Index gained 0.5 percent and Taiwan’s Taiex Index added 0.3 percent. New Zealand’s NZX 50 Index slipped 0.1 percent and South Korea’s Kospi index declined 0.4 percent. Markets in Singapore are closed for a holiday.

Futures on the Standard & Poor’s 500 Index added 0.1 percent. The underlying measure fell 0.3 percent on Friday as U.S. jobs data boosted trader expectations for a Federal Reserve interest-rate increase next month.

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