Asian Stocks Rise as Easing Ukraine Concern Weakens Yen
Asian stocks rose a second day after comments from Russian President Vladimir Putin signaled the Ukraine crisis won’t immediately escalate. China shares slid amid concern the country is facing its first onshore corporate bond default.
The MSCI Asia Pacific Index rose 0.5 percent to 137.54 as of 9:45 p.m. in Hong Kong. The Standard & Poor’s 500 Index yesterday jumped 1.5 percent to a record, the biggest one-day gain this year. Putin said yesterday that he’s not considering taking control of the Black Sea region of Crimea and would send troops into Ukraine only in extreme circumstances. China set a growth target of 7.5 percent today as an annual meeting of Communist Party officials begins.
“There’s falling concern about the conflict in Ukraine, supporting risk assets,” Ashley Davies, a strategist at Commerzbank AG in Singapore, said by phone. “The growth target China established is largely a barometer of the government’s reform appetite. The 7.5 percent growth suggests not-particularly strong appetite for dramatic reform to take place this year.”
Chinese equities retreated as Shanghai Chaori Solar Energy Science & Technology Co. (002506) said yesterday it may not be able to make an 89.8 million yuan ($14.6 million) interest payment in full by the March 7 deadline. A default would highlight strain in China’s financial system after a trust product issued by China Credit Trust Co. was bailed out in January.
The Shanghai Composite Index slid 0.9 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 1.2 percent. The benchmark Hang Seng Index fell 0.3 percent, erasing gains of as much as 0.8 percent.
“Judging from the lack of performance of China’s stock market today, investors may well be focusing more on debt risk just like us,” Yao Wei, a Hong Kong-based China economist at Societe Generale SA, wrote in a report. “Financial system risk continues to intensify as we expected,” he said, referring to Shanghai Chaori’s potential default.
Japan’s Topix index climbed 0.7 percent. Honda Motor Co., a carmaker that gets more than 80 percent of sales overseas, rose 1.3 percent to 3,732 yen after the yen yesterday posted its steepest decline since Jan. 14.
New Zealand’s NZX 50 Index added 0.8 percent, its fourth day closing at a record high. Australia’s S&P/ASX 200 Index (AS51) advanced 0.9 percent after gross domestic product topped estimates. South Korea’s Kospi index and Taiwan’s Taiex Index both rose 0.9 percent. Singapore’s Straits Times Index advanced 0.4 percent.
The MSCI Asia Pacific Index traded at 12.9 times the estimated earnings of its constituent companies, compared with 15.9 for the S&P 500 and 14.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Ukraine, a former Soviet republic, has been plunged into turmoil since protesters forced the ouster of the president last month. Russia keeps its Black Sea fleet in Crimea, where the majority language is Russian. Troops in the region have only been securing their bases and gunmen who have seized crucial infrastructure and surrounded military installations in the Crimea are acting independently, Putin said yesterday.
China’s growth target was given in a work report that Premier Li Keqiang will deliver today in Beijing. Maintaining expansion close to last year’s 7.7 percent would help sustain demand for oil and iron ore and support a global economy that’s forecast by the International Monetary Fund to accelerate. At the same time, analysts from UBS AG to Societe Generale SA say a lower goal would’ve been more in keeping with the government’s pledge to move away from growth at all costs. The inflation target is 3.5 percent.
“I feel like an important decision has been made in China,” Mark Matthews, Singapore-based head of Asia research for Julius Baer, which oversees about $377 billion, said on Bloomberg TV. “They have chosen to focus on quality over quantity.”
The annual gathering brings together businessmen and officials for about two weeks of discussion. The National People’s Congress comes as leaders pledge to give markets a “decisive” role in the economy and is the first to be overseen by President Xi Jinping and Premier Li.
Investors are watching the meeting for clues to the next steps to fix local-government finances, charge market prices for natural resources, rein in shadow-banking risks, free up deposit rates and open up state businesses to private investment.
Nippon Electric Glass Co.. (5214) a supplier of panels used in liquid crystal displays, climbed 4.2 percent to 473 yen after Macquarie Group Ltd. raised its rating on the stock to outperform from neutral.
GCL-Poly Energy Holdings Ltd., the world’s largest maker of polysilicon used for solar panels, gained 2.5 percent to HK$2.89 after Trina Solar Ltd. said it expects shipments of solar modules to soar on surging demand.
Fuji Heavy Industries Ltd., which makes Subaru cars, was the second-biggest decliner on the Nikkei 225 Stock Average after cutting its profit forecast. The shares dropped 1.8 percent to 2,685 yen.
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