Asian Stocks Advance After China Relaxes Lending Curbs to Bolster Growth
Asian stocks rose, extending the longest streak of weekly gains on the region’s benchmark since 2005, after China cut banks’ reserve requirements to fuel lending and buoy growth, boosting demand for riskier assets.
Franshion Properties China Ltd. (817), a mainland developer, rose 4.2 percent in Hong Kong. China Shipping Container Lines Co. climbed 4.7 percent on the prospect of higher cargo rates on Europe-Asia routes. Japanese steelmakers advanced after Credit Suisse Group AG boosted their share-price estimates. Billabong International Ltd. (BBG) jumped 8 percent in Sydney after the surfwear company said it’s considering a takeover offer.
China’s reserve-ratio cut “is a bold move and one aimed at maintaining growth rates, which will provide support for equity investors,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “The timing is probably just ahead of China committing to European bailout funds.”
The MSCI Asia Pacific Index (MXAP) climbed 0.8 percent to 128 as of 7:55 p.m. in Tokyo, about 0.6 percent short of entering a so- called bull market from its Oct. 5 low. Japan’s Nikkei 225 Stock Average (NKY) gained 1.1 percent even after a report showed the country’s exports fell last month. Australia’s S&P/ASX 200 Index increased 1.4 percent, while South Korea’s Kospi Index rose 0.1 percent.
Hong Kong’s Hang Seng Index (HSI) slid 0.3 percent, while China’s Shanghai Composite Index advanced 0.3 percent. Singapore’s Straits Times Index rose 0.7 percent.
China Reserve Requirements
The proportion of cash Chinese banks must set aside will drop half a percentage point from Feb. 24, freeing up more capital for loans, the central bank said Feb. 18 on its website. The cut may add 400 billion yuan ($64 billion) to the financial system, according to Australia & New Zealand Banking Group Ltd.
Franshion Properties jumped 4.2 percent to HK$1.97 in Hong Kong. Komatsu Ltd. (6301), a maker of construction machinery that gets more than a fifth of its revenue from China, rose 3 percent to 2,423 yen in Tokyo.
The MSCI Asia Pacific Index gained 12 percent this year through Feb. 17, compared with an 8.2 percent advance by the S&P 500 and an 8.8 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 14.6 times estimated earnings on average at the last close, compared with 13.1 times for the S&P 500 and 11 times for the Stoxx 600.
Container shipping stocks rose after Maersk Line Ltd., the world’s largest container carrier, said it will cut 9 percent of its shipping capacity between Asia and Europe. The reduction is positive news for the loss-making industry, and provides credibility to proposed rate increases on the Asia-Europe trade lanes, Citigroup Inc. said.
China Shipping Container jumped 4.7 percent to HK$2.43 in Hong Kong, while Taiwan’s Evergreen Marine Corp. climbed 4.3 percent to NT$19.25 in Taipei.
Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.5 percent today as Prime Minister Lucas Papademos said Greece has found the additional spending cuts needed to secure a debt bailout. The index added 0.2 percent in New York on Feb. 17 after U.S. employment, manufacturing and housing data beat estimates.
Japanese steelmakers rose after Credit Suisse raised their stock-price estimates. The investment bank expects export prices for the material to recover while material costs fall.
JFE Holdings Inc. (5411) rose 8.4 percent to HK$1,712 yen, the second-steepest gain in the MSCI Asia Pacific Index. Nippon Steel Corp. advanced 5.2 percent to 224 yen.
Billabong increased 8 percent to A$2.83 in Sydney after saying it will consider a A$3 per share takeover from buyout firm TPG Capital after the bid was revised to allow for an asset sale. The shares extended gains after surging 46 percent on Feb. 17 after Billabong announced TPG’s initial approach.
Among stocks that fell, Universal Entertainment Corp. (6425) slumped 21 percent to 1,516 yen in Tokyo after Wynn Resorts Ltd. redeemed its 20 percent stake in the pachinko-machine maker at a 31 percent discount and accused Chairman Kazuo Okada of making improper payments to Philippine regulators.
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