Asian Stocks Rise Most in Seven Months on Chinese Inflation, Yen

Asian stocks rose, with the regional benchmark index capping the biggest weekly gain in seven months, as the yen traded near 100 per dollar and slower-than-estimated inflation in China eased concern about monetary-policy tightening.

BHP Billiton Ltd., a mining company that gets 30 percent of its revenue in China, advanced 3.4 percent in Sydney. Toyota Motor Corp. jumped 11 percent even after defective airbag inflators led Japan’s three biggest carmakers including Toyota to recall more than 3 million vehicles. China Southern Airlines Co., the country’s biggest domestic carrier, rose 3.6 percent in Hong Kong after a slump last week on concern an outbreak of bird flu in China will hurt travel demand.

The MSCI Asia Pacific Index added 3.5 percent to 138.17 this week, the biggest weekly gain since the period ended Sept. 14, 2012. The measure closed on April 11 at the highest level since August 2011. Japan’s Topix Index rallied 7.7 percent in its best week since December 2009, with the Bank of Japan reiterating a pledge to continue stimulus.

“The economy in China is weaker over the past few months compared to the fourth quarter of last year, and so if this economic trend continues there’s a possibility that authorities might ease up a little bit,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., which manages about $51 billion. About Japan, “one has to be careful because stocks prices have done so well. It’s beautiful, but it is factoring in at least one and a half year’s EPS growth.”

Chinese Inflation

The MSCI Asia Pacific Index rallied 6.8 percent this year amid optimism Japan will deploy more stimulus and that policy makers in the U.S. and China remain on standby to support growth. Asia’s benchmark trades at 14 times average estimated earnings, compared with 14.4 for the Standard & Poor’s 500 Index and 12.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Hong Kong’s Hang Seng Index climbed 1.7 percent and China’s Shanghai Composite Index retreated 0.8 percent as data showed April 9 that the nation’s consumer price index rose 2.1 percent in March from a year earlier. Taiwan’s Taiex Index slid 1.5 percent after capping the biggest drop in 10 months on April 8.

South Korea’s Kospi Index dipped 0.2 percent as foreigners sold shares amid concern North Korea would conduct a missile test. Australia’s S&P/ASX 200 Index rose 2.5 percent. Singapore’s Straits Times Index slipped 0.2 percent.

Trade, Loans

Chinese Premier Li Keqiang, who succeeded Wen Jiabao last month in a once-a-decade leadership transition, has signaled his government will take steps this year to loosen state control over interest rates as part of efforts to sustain economic growth.

China’s imports rose by a better-than-forecast 14.1 percent in March while export growth slowed to 10 percent from a year earlier, the customs administration said April 10. Separately, new local-currency loans in March were 1.06 trillion yuan ($171 billion), the People’s Bank of China said April 11, beating a 900 billion yuan median estimate in a Bloomberg survey.

Companies that do business in China and are sensitive to growth rose. BHP Billiton, the world’s biggest miner, gained 3.4 percent to A$33.35, the first weekly advance since the period ended Feb. 15. Rio Tinto Group, Australia’s second-largest miner by market value, added 2.3 percent to A$56.90.

Chinese Lenders

Chinese lenders advanced. Industrial & Commercial Bank of China Ltd., the nation’s largest bank, rose 1 percent to HK$5.25. Bank of China Ltd., the country’s third-biggest lender by market value, gained 2 percent to HK$3.54.

Japanese stocks rallied as the yen dropped and Bank of Japan Governor Haruhiko Kuroda on April 10 reiterated a pledge to achieve a 2 percent inflation target within two years.

Toyota Motor, the world’s biggest carmaker, soared 11 percent to 5,660 yen. Nintendo Co., a Japanese maker of video-game players that generates 73 percent of its sales abroad, jumped 10 percent to 11,400 yen. Komatsu Ltd., a construction machinery maker that gets 80 percent of its revenue outside Japan, surged 14 percent to 2,505 yen.

Takata Corp. fell 5.4 percent to 1,786 yen in Tokyo, the first decline in six weeks, after defective airbag inflators led Toyota, Honda Motor Co. and Nissan Motor Co. to call back more than 3 million vehicles. Honda, Japan’s No.2 carmaker by market value, gained 7.8 percent to 3,955 yen. Nissan, the third-biggest, added 8.7 percent to 1,052 yen.

The Japanese safety-gear producer made the products from 2000 to 2002, said Hideyuki Matsumoto, a Takata spokesman. He declined to comment on its customers, who had identified the supplier.

Airlines Rebound

Hong Kong-listed airlines rebounded this week as concerns over an outbreak of a new strain of bird flu in China eased. A 4-year-old boy in Shanghai was discharged from a local hospital on April 10 after recovering from the H7N9 bird flu, the first patient declared cured.

China Southern Airlines gained 3.6 percent to HK$4.01 after slumping 13 percent last week. Cathay Pacific Airways Ltd., Hong Kong’s largest international carrier, climbed 3.3 percent to HK$12.68 after slumping to a seven-month low last week.