Asian Stocks Jump by Most in Four Months on Stimulus Speculation

Making Sense of the Chinese Markets
  • Benchmark gauge climbs from 3 1/2-year low as crude surges
  • Speculations grows that Asia, Europe central banks will act

Asian stocks rose, with the regional benchmark index heading for its biggest advance since September, following a rally in U.S. shares and oil amid optimism that policy makers in Europe and Asia will step in with more stimulus measures.

The MSCI Asia Pacific Index surged 3.7 percent to 118.68 as of 4:22 p.m. in Hong Kong, poised for the second-largest gain since 2009 after reaching a 3 1/2-year low on Thursday. The gauge pared its third weekly loss, to 1.2 percent. Japanese shares advanced the most in four months, with investors buying into a bear market to cover short positions, and Hong Kong’s benchmark index climbed from a six-year low. Energy shares soared with crude futures.

Equities were boosted by the prospects of central bank actions across the globe. The European Central Bank said it may bolster support as soon as March, while China’s vice president Li Yuanchao said the government is willing to intervene to tamp down market volatility. The Nikkei reported that the Bank of Japan, which meets next week, is considering steps to counter the hit to inflation of crude’s slide.

“The cavalry might be coming to the rescue in terms of the central banks starting to sound more dovish,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $120 billion, said on Bloomberg TV. “There’s a little bit of light at the end of the tunnel. We’ve probably seen the worst and by the end of the year things will be a lot brighter than they are now.”

Global equities halted losses Thursday on the brink of a bear market. The MSCI All-Country World Index has dropped 19 percent from a record high in May, amid plunging energy prices, rising U.S. interest rates and concern over China’s ability to manage a transition to services-led growth.

Japan Rally

The Topix index jumped 5.6 percent, the most since Sept. 9 and paring its worst monthly loss since October 2008. The Nikkei 225 Stock Average soared 5.9 percent. The Japanese gauges fell into a bear market this week. The Topix’s 14-day relative strength index closed at 21.29 Thursday, below the level of 30 that some traders say indicates shares will rise, while bearish bets on Tokyo’s stock exchange accounted for more than 40 percent of total trading value that same day.

“We’re seeing short squeeze galore,” said Mikey Hsia, a trader at Sunrise Brokers LLP in Hong Kong. “Much of this is technical. Japan has had big moves for three days in a row now -- it’s becoming common.”

South Korea’s Kospi index climbed 2.1 percent, its biggest gain since September. New Zealand’s benchmark gauge added 0.7 percent and Australia’s S&P/ASX 200 Index increased 1.1 percent. Taiwan’s Taiex index jumped 1.2 percent. Singapore’s Straits Times Index advanced 2.1 percent, its best performance since October.

Below Book

Hong Kong stocks rebounded Friday after falling below the value of their net assets for the first time since 1998 on Thursday as concerns over capital outflows and China’s economic slowdown sent the benchmark index deeper into a bear market. The Hang Seng Index jumped 2.9 percent.

Chinese stocks rallied as energy producers surged on higher oil prices and after the government signaled it will curb overcapacity in industries such as coal that have been dragging down economic growth. The Shanghai Composite Index rose 1.3 percent, while the Hang Seng China Enterprises Index climbed 3.4 percent.

Natural Transition

China is in a natural growth transition, and neither the nation’s yuan policy nor its slumping equities should be a big concern to global investors, said Heather Arnold, the director of research at Templeton Global Advisors Ltd. Her view contradicts that of billionaire investor George Soros, who believes the world’s second largest economy is facing a hard landing, a slump that will worsen global deflationary pressures, drag down stocks and boost U.S. government bonds.

Sharp Corp. jumped 3.1 percent in Tokyo, extending Thursday’s 5.8 percent gain, after reports Taiwan’s Foxconn Technology Co. will offer $5.3 billion to acquire the struggling Japanese electronics company. Treasury Wine Estates Ltd. surged 17 percent in Sydney after the owner of the Penfolds and Wolf Blass brands posted earnings that beat analyst estimates. Keppel Corp. added 5 percent as Daiwa Securities Co. and UOB-Kay Hian Holdings Ltd. raised their ratings after the world’s biggest oil-rig builder reported profit that surpassed analyst estimates.

E-mini futures on the Standard & Poor’s 500 Index added 1.1 percent. The underlying index rose 0.5 percent Thursday, recovering from a 21-month low, as energy shares rallied with oil. West Texas Intermediate surged 3.6 percent on Friday, after a 4.2 percent advance the previous day.

European stocks jumped by the most in a month as ECB President Mario Draghi said downside risks to the euro-area economy have increased since the year began, and the central bank may need to bolster its stimulus programs as soon as March amid rising concerns about the recovery.

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