Asian Stocks Advance After Yellen Points to 2015 Rate Increase

  • Chinese market volumes wane ahead of week-long holiday
  • MSCI Asia Pacific Index on course for worst quarter since 2011

Asian stocks rose after Federal Reserve Chair Janet Yellen said the central bank is on track to raise interest rates this year.

“Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter,” Yellen said during a speech Thursday in Massachusetts. “But if the economy surprises us, our judgments about appropriate monetary policy will change.”

The MSCI Asia Pacific Index added 0.2 percent to 125.08 as of 4:09 p.m. in Hong Kong. The regional benchmark measure has fallen 14 percent since the end of June, on course for its worst quarter in four years, as the Fed prepares to raise rates with financial markets rattled by concern slowing Chinese growth.

“What we’ve heard from Janet Yellen has done a lot to settle the market,”
Kerry Craig, a Melbourne-based global strategist at JPMorgan Asset management, which oversees $1.7 trillion, told Bloomberg TV. The Fed is “very willing to move on higher rates this year. Ultimately they know that is a good thing for the U.S. economy and a good thing for markets. We still favor an overweight to developed market equities -- this is an environment where risk is the place to be.”

New Arrows

Japan’s Topix index added 1.9 percent as investors bought shares ahead of a deadline to ensure they received dividend payments. Stocks that pay out more of their income as dividends, including banks and insurance companies, were among the biggest gainers. MS&AD Insurance Group Holdings Inc. rose 4.1 percent and Sumitomo Mitsui Financial Group Inc. advanced 3.6 percent.

More than half of the 1,887 stocks in the Topix will trade ex-dividend on Monday, data compiled by Bloomberg show. The group includes Toyota Motor Corp., Mitsubishi UFJ Financial Group Inc. and Nippon Telegraph & Telephone Corp. That means Friday was the last chance for investors to buy shares if they want to receive the payouts.

Prime Minister Shinzo Abe unveiled a new economic growth target Thursday and vowed to halt the nation’s population slide. The premier laid out three new “arrows” of his Abenomics plan: a strong economy, increased support for families with children, and social security.

Japan Inflation

The Bank of Japan’s main inflation gauge dropped into negative territory, data showed Friday, as weak domestic demand and plunging oil prices wiped out the impact of Governor Haruhiko Kuroda’s unprecedented monetary stimulus.

Hong Kong’s Hang Seng Index advanced 0.4 percent and the Hang Seng China Enterprises Index of mainland firms listed in the city gained 0.5 percent.

Macau casino companies tumbled in Hong Kong this week amid concern gaming revenue will continue to be curbed as junket operators reduce credit offered to high-end gamblers. MGM China Holdings Ltd. and Wynn Macau Ltd. both lost more than 10 percent this week. The Bloomberg Intelligence Macau Gaming Index has slumped 46 percent this year.

The Shanghai Composite Index fell 1.6 percent Friday after capital outflows hit a record and concern grew China’s economic slowdown is worsening and the government is scaling back support for equities.

Waning Trade

Trading on China’s stock market is waning before a week-long holiday shutdown that starts on Oct. 1. A private report showed this week that a preliminary manufacturing gauge unexpectedly fell to a six-year low, while margin debt in Shanghai slid to about 40 percent of its peak recorded in June. President Xi Jinping said this week that equities have entered a phase of “self-recovery.”

Taiwan’s Taiex Index rose 0.1 percent and New Zealand’s S&P/NZX 50 Index gained 0.2 percent. Australia’s S&P/ASX 200 Index slipped 0.6 percent, while South Korea’s Kospi index dropped 0.2 percent. Singapore’s Straits Times Index slid 0.4 percent. India is closed for a holiday.

Slower demand from China, where growth is projected to drop below 7 percent this year, has helped push down commodity prices, sapping already low inflation in the U.S. The Fed’s preferred measure of prices rose 0.3 percent in the year through July and has been under its 2 percent target since April 2008.

Yellen resumed her planned schedule after feeling unwell toward the end of her speech, Fed spokeswoman Michelle Smith said in an e-mailed statement. The Fed chief felt dehydrated, Smith said.

E-mini futures on the Standard & Poor’s 500 Index added 0.9 percent. The underlying gauge, which closed before Yellen gave her speech, declined 0.3 percent Thursday.

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