Asian Stocks Maintain Wednesday's Gains Ahead of BOJ Decision

  • Investors await Bank of Japan after Fed sees economic risks
  • Equities in Japan and China slump while Hong Kong advances

Asian stocks held Wednesday’s gains as investors awaited the Bank of Japan’s decision on monetary policy after the Federal Reserve said unstable markets may pose risks to the U.S. economy. Equities fell in Tokyo and Shanghai while Hong Kong rallied.

The MSCI Asia Pacific Index slipped less than 0.1 percent to 119.51 as of 4:32 p.m. in Hong Kong, after swinging between a drop of 0.6 percent and gains of 0.3 percent. The regional gauge pared losses in late afternoon trading as crude rebounded from its declines. The index jumped 1.4 percent Wednesday, yet is still heading for a 9.5 percent slump this month on concern about a slowdown in China and a rout in oil and other commodities.

“The Fed is acknowledging reality -- that the outlook has become more uncertain -- and is signaling that there may be fewer rate hikes,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $120 billion, said by phone. “It seems central bankers around the world are starting to respond, which ultimately should be positive for share markets.”

The Standard & Poor’s 500 Index lost 1.1 percent on Wednesday as the Fed said it’s “closely monitoring” developments from China to Europe and in oil for any adverse impact on the U.S. economy. The Fed left the benchmark rate unchanged at the end of the two-day meeting.

Borrowing Costs

Since the U.S. central bank raised interest rates last month for the first time in almost a decade, turmoil in financial markets and a dimming of the outlook for global growth have spurred investors to expect a slower rise in borrowing costs. The median forecast of policy makers in December called for four quarter-point rate increases in 2016. Futures markets indicate that traders see fewer.

E-mini futures on the S&P 500 Index climbed 0.8 percent on Thursday.

Japan’s Topix index lost 0.6 percent ahead of Friday’s monetary policy statement from the Bank of Japan. Turmoil in global financial markets and the yen’s recent strength have put pressure on the BOJ to consider a policy adjustment to drive price increases and growth in Japan. Inflation data due Friday is forecast to show an increase of just 0.1 percent. Still, only six of 42 economists surveyed by Bloomberg in recent days forecast that the BOJ will take action at its two-day meeting, which started Thursday.

Amari Resignation

Nikkei 225 Stock Average futures pared gains after the cash-market close as Economy Minister Akira Amari resigned from his post amid allegations of graft. Amari said he was stepping down to take responsibility for failure to manage his staff.

South Korea’s Kospi index rose 0.5 percent, even as Samsung Electronics Co., which has the biggest weighting on the index, slid 2.6 percent on fourth-quarter profit that missed analysts’ estimates. Australia’s S&P/ASX 200 Index gained 0.6 percent.

New Zealand’s benchmark gauge rose 0.1 percent. The nation’s central bank left its official cash rate unchanged at 2.5 percent and said it may need to cut interest rates further as falling oil prices and a weaker global growth outlook prolong a period of low inflation.

Hong Kong’s Hang Seng Index jumped 0.8 percent, erasing losses in the final hour to end higher for a second day. The Shanghai Composite Index dropped 2.9 percent, adding to a two-day plunge as slumping profits at industrial companies increased concern the economic slowdown is deepening. The gauge is down 9.6 percent over three days.

Alibaba Health

Alibaba Health Information Technology Ltd. slumped 20 percent in Hong Kong, the biggest drop on the MSCI Asia Pacific Index, after Beijing Business Today reported drug authority will withdraw the company’s operating rights for one of its businesses. Alps Electric Co. tumbled 17 percent in Tokyo as smartphone component suppliers slid on concern demand is slowing following Samsung Electronics and Apple Inc.’s financial results. Among materials companies, JFE Holdings Inc. dropped 6.1 percent and Hitachi Metals Ltd. retreated 5.8 percent in Tokyo.

Hitachi Chemical Co. jumped 13 percent in Tokyo, the biggest gain on Asia’s equity gauge, after reporting nine-month operating profit that more than doubled from a year earlier. Henderson Land Development Co. took the lead in Hong Kong, jumping 6.7 percent, as its billionaire chairman Lee Shau-Kee boosted his stake in the company.

Crude oil futures fell as much as 1.7 percent on Thursday after climbing 2.7 percent in New York on Wednesday. Stockpiles at the biggest U.S. storage hub dropped even as nationwide crude supplies climbed to the highest level since 1930.

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