Asian Stocks Advance on China Growth, Fed Stimulus
Asian stocks rose, extending a two-month high, after Premier Li Keqiang said China’s economic growth won’t be less than 7 percent and as U.S. housing data damped concerns the Federal Reserve will reduce stimulus.
Industrial & Commercial Bank of China Ltd., the world’s second-biggest lender by market value, jumped 4.9 percent in Hong Kong. Samsung Electronics Co., the largest maker of smartphones, rose 2.7 percent in Seoul. Nippon Steel & Sumitomo Metal Corp. (5401) climbed 3.3 percent in Tokyo after the Nikkei newspaper reported the No. 1 steelmaker by value agreed to a 10 percent price increase with Toyota Motor Corp.
The MSCI Asia Pacific Index climbed 0.8 percent to 137.06 as of 9:28 p.m. in Hong Kong, with about four stocks rising for each that fell. The Shanghai Composite Index (SHCOMP) jumped 2 percent. China’s “bottom line” for gross domestic product growth is 7 percent and the nation can’t let growth go below that, Beijing News reported today, citing Premier Li’s comments at a recent meeting with economists and business people.
Li’s statement “helped to reassure investors,” Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion, said by telephone. “China could introduce some kind of fiscal stimulus to help stabilize the economy. While there’s a likelihood the Fed will start tapering monetary stimulus in September, we don’t expect the Fed to start raising rates until the end of 2014. We remain overweight on equities.”
The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong added 3.9 percent, its biggest gain since Jan. 2. The benchmark Hang Seng Index gained 2.3 percent, its largest rally since July 11. The Shanghai Composite Index also posted its biggest increase since July 11.
Japan’s Topix (TPX) index added 0.5 percent, while the benchmark Nikkei 225 Stock Average climbed 0.8 percent. South Korea’s Kospi index jumped 1.3 percent and Australia’s S&P/ASX 200 Index rose 0.3 percent. New Zealand’s NZX 50 Index advanced 0.6 percent, Taiwan’s Taiex Index (TWSE) gained 1.4 percent and Singapore’s Straits Times Index increased 0.2 percent.
Futures on the Standard & Poor’s 500 Index added 0.1 percent after the gauge rose 0.2 percent to a record in New York yesterday. A decline in U.S. home sales eased concern the Federal Reserve will start reducing stimulus within two months. Sales of previously owned U.S. homes unexpectedly dropped 1.2 percent in June, data yesterday showed.
“The timing of the start of tapering might get pushed out a bit,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has about $130 billion under management. “Tapering is less of a threat to the market than many had feared a few months ago. By year-end, we’ll be looking at indexes being quite a bit higher than they are at the moment.”
Half of the economists surveyed by Bloomberg say the Federal Reserve will in September begin tapering its bond-buying program that has supported bond and equity gains.
The MSCI Asia Pacific Index, the benchmark regional equities gauge, advanced 5.2 percent this year through yesterday, with consumer discretionary stocks leading the gain and energy shares falling the most among the 10 industry groups on the measure.
The Asian benchmark gauge traded at 13.3 times estimated earnings yesterday, compared with 15.4 times for the Standard & Poor’s 500 Index and 13.5 times for the Stoxx Europe 600 Index.
Japan’s Topix index surged 42 percent this year, the best-performing of 24 developed markets tracked by Bloomberg News.
After plunging as much as 18 percent from a May 22 high, the Topix rebounded amid optimism Prime Minister Shinzo Abe will push through reforms following the ruling coalition’s election victory in the upper house on July 21. The gauge added 15 percent over the past five weeks, the biggest such advance since April 2009.
Chinese lenders and developers rose. ICBC, as China’s biggest bank is known, climbed 4.9 percent to HK$5.10. China Construction Bank Corp. (939) advanced 4.8 percent to HK$5.70. China Overseas Land & Investment Ltd., the largest mainland homebuilder traded in Hong Kong, gained 4.1 percent to HK$21.50.
Exporters climbed. Samsung Electronics rose 2.7 percent to 1.307 million won in Seoul. Li & Fung Ltd. (494), a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., gained 1.1 percent to HK$10.80 in Hong Kong. Canon Inc., the world’s biggest camera maker, added 1.2 percent to 3,420 yen in Tokyo.
Nippon Steel climbed 3.3 percent to 309 yen. The Tokyo-based steelmaker agreed with Toyota to raise prices by 10,000 yen ($100) per ton, or 10 percent, for the first half of the year to March 2014, the Nikkei reported today, without saying where it obtained the information. The increase is the first in two years, the report said.
ZTE Corp., China’s No. 2 maker of equipment for phone networks, jumped 20 percent to HK$13.84 in Hong Kong, the most on the MSCI Asia Pacific Index. First-half net income rose 23 percent to 302.3 million yuan ($49 million), the Shenzhen-based company said in a filing yesterday.
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