Asian Stocks Outside Japan Approach One-Year High on Fed Minutes

FOMC Minutes: Figuring Out Who Said What
  • Hang Seng jumps as Tencent, Ping An earnings beat estimates
  • Topix slips to two-week low as the yen advances for fifth day

Asian stocks outside Japan neared a one-year high after minutes of the Federal Reserve’s last meeting showed officials aren’t in any hurry to raise interest rates. Shares in Tokyo slipped as the yen strengthened.

The MSCI Asia Pacific Excluding Japan Index rose 0.6 percent to 451.45 as of 4 p.m. in Hong Kong, just shy of the highest closing level since July 2015. Hong Kong’s Hang Seng Index climbed 1 percent after Tencent Holdings Ltd. and Ping An Insurance (Group) Co. posted earnings that beat estimates. Japan’s Topix index fell 1.6 percent as the yen rose to as strong as 99.65 a dollar.

“The message from the Fed is that they’re going to be cautious in raising rates,” said Shane Oliver, the Sydney-based global investment strategist at AMP Capital Investors Ltd., which manages more than $110 billion. “That’s supportive of the share markets.”

Asian stocks have rallied 24 percent from a February low as lackluster data from the world’s biggest economies fueled speculation central banks will continue to support them with stimulus and loose monetary policy. The Fed minutes released Wednesday showed officials saw little risk of a sharp uptick in inflation, helping drive the odds of a rate increase this year back below 50 percent.

‘Cautious Note’

“The minutes struck a cautious note against any rushed rate hike decision, while continuing to support the idea of a moderated rate increase,” said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. “The odds are for a December hike, rather than a September one, and the yen looks set to extend gains from here.”

Japanese shares resumed declines after climbing 1 percent on Wednesday, as the yen advanced for a fifth straight day. Investors are weighing the policy response from the Bank of Japan as the currency headed for its strongest level against the greenback since November 2013.

“This will force the BOJ’s hand to something drastic,” AMP’s Oliver said. “Policy makers should probably consider introducing helicopter money since the monetary and fiscal stimulus they announced a few ago were disappointing.”

Tencent, Samsung

The Hang Seng Index closed at the highest level since November 2015. Tencent jumped 5 percent to a record as investments by Asia’s biggest Internet company on premium content including Game of Thrones and NBA broadcasts helped the company boost sales and profit, defying investor expectations and a slowing Chinese economy.

Hong Kong’s benchmark equity index has climbed 26 percent from its February low as fears of a Chinese hard landing receded and the city’s property market stabilized amid an improving interest-rate outlook. The announcement of a long-delayed exchange link with Shenzhen this week and better-than-expected corporate profits have given extra vigor to the rally, even as technical indicators flash a warning that the market may be overheating.

South Korea’s Kospi index rose 0.6 percent. Samsung Electronics Co. jumped 4.7 percent to an all-time high ahead of the release of its Galaxy Note 7 smartphone on Friday. The company had benefited from sluggish sales of iPhones as U.S. carriers promoted the Galaxy to high-end consumers, helping to reduce marketing expenses.

Regional Gauges

The Jakarta Composite Index rose 1.5 percent and Thailand’s SET Index advanced 1.1 percent, pacing gains among major Asian gauges. Taiwan’s Taiex index added 0.1 percent, New Zealand’s S&P/NZX 50 Index gained 0.4 percent, while Australia’s S&P/ASX 200 Index fell 0.5 percent. The Shanghai Composite Index declined 0.2 percent.

Treasury Wine Estates Ltd. surged 12 percent in Sydney after the maker of Penfolds Grange reaffirmed expectations the purchase of Diageo Plc’s U.S. and U.K. wine assets will boost earnings next year. Soho China Ltd. climbed 8.1 percent in Hong Kong after the Beijing-based developer reported first-half profit that was more than four times as much as a year earlier. Nissan Motor Co. dropped 2.6 percent in Tokyo, pacing losses among Japanese exporters as the yen strengthened.

Futures on the S&P 500 Index were little changed. The U.S. equity benchmark index gained 0.2 percent on Wednesday.

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