Asian Stocks Rise on Optimism Yellen Will Keep Stimulus

Asian stocks rose, with the benchmark index gaining the most in two weeks, on speculation the next head of the Federal Reserve will maintain U.S. stimulus and as a falling yen boosted Japanese shares.

Sony Corp., a Japanese electronics maker that gets 68 percent of revenue abroad, added 2.3 percent. Shandong Weigao Group Medical Polymer Co., a maker of medical products, jumped a record 30 percent in Hong Kong after third-quarter sales beat analysts’ estimates. Tencent Holdings Ltd., Asia’s largest Internet company, gained 4.6 percent in Hong Kong after revenue increased from online games.

The MSCI Asia Pacific Index advanced 0.7 percent to 139.57 as of 7:44 p.m. in Tokyo, its biggest rally since Oct. 30. All 10 industry groups on the gauge rose. Janet Yellen, nominated to be the next Fed chairman, said the U.S. economy needs to improve before cutting stimulus. Japanese shares extended gains after Finance Minister Taro Aso said the nation must retain the option to intervene in currency markets.

“Yellen’s comments are making a big impact because they signal the continuation of stimulus, which is good news for global shares,” said Takuya Takahashi, a senior strategist at Daiwa Securities Group Inc., Japan’s second-largest brokerage. “Aso’s remarks are helping Japanese equities further. I don’t think what he said is that powerful to lift shares, but it added to the favorable environment. Investors have to jump on the train that already took off.”

Currency Comments

Japan’s Nikkei 225 Stock Average soared 2.1 percent to the highest close since May 22. Fast Retailing Co., a clothing retailer with an about 9 percent weighting on the equity gauge, advanced 5.2 percent to 34,250 yen. The broader Topix index added 1.2 percent.

As with other nations, it’s necessary for Japan to be able to intervene in currency markets if necessary, Aso said at a parliamentary committee today in response to a question about the government’s special foreign-exchange accounts law. The country must set aside a proper amount of money to fund such actions, he said. The yen lost 0.5 percent to 99.76 per dollar.

Sony gained 2.3 percent to 1,786 yen. Nissan Motor Co., a Japanese carmaker that generates 80 percent of its revenue overseas, added 1.1 percent to 921 yen.

Japan’s gross domestic product rose an annualized 1.9 percent in the third quarter after growth slowed from a 3.8 percent pace the previous three months, the Cabinet Office reported today in Tokyo. The median estimate of 27 economists in a Bloomberg News survey was for a 1.7 percent increase.

South Korea’s Kospi index added 0.2 percent as the central bank kept its benchmark interest rate unchanged for a sixth month. Australia’s S&P/ASX 200 Index gained 0.7 percent, while New Zealand’s NZX 50 Index rose 0.2 percent.

Yellen Testimony

Hong Kong’s Hang Seng Index rose 0.8 percent, and China’s Shanghai Composite Index added 0.6 percent. Taiwan’s Taiex Index gained 0.4 percent, while Singapore’s Straits Times Index advanced 0.8 percent.

Futures on the Standard & Poor’s 500 Index added 0.3 percent today. The measure gained 0.8 percent to a record yesterday as Macy’s Inc. led a rally among retailers and investors speculated Yellen will continue the central bank’s stimulus policy.

“A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,” Yellen said in prepared testimony ahead of her nomination hearing. “I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”

Growth Strategy

The remarks show Yellen is committed to the central bank’s strategy of attempting to boost growth and lower the nation’s 7.3 percent unemployment rate, more than four years after the economy began to recover from the longest and deepest recession since the Great Depression.

Shandong Weigao jumped 30 percent to HK$8.98 after reporting that third-quarter revenue grew 26 percent from a year earlier to 1.24 billion yuan ($204 million).

Tencent climbed 4.6 percent to HK$410.80 after sales surged 35 percent from online games played on desktop PCs and its WeChat messaging app.

Among shares that fell, Hanwha Investment & Securities Co. led brokerages lower in Seoul after the nation lifted a five-year ban on shorting of financial stocks. Hanwha slumped 6 percent to 3,375 won. Daewoo Securities Co., the country’s second-largest brokerage by market value, lost 5.2 percent to 9,020 won.

The Asia-Pacific gauge traded at 13.6 times estimated earnings, compared with 16.1 for the S&P 500 and 15 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.