Asian Stocks Outside Japan Rise as Chinese Shares Surge

Asian stocks outside Japan rose as Chinese shares surged on speculation the government will take steps to bolster equities.

The MSCI Asia Pacific excluding Japan Index climbed 0.5 percent to 477.52 as of 4:38 p.m. in Hong Kong, with all but two of the 10 industry groups rising. China will relax limits on foreign investment in listed companies and expand quotas for capital flow, the State Council said last week. President Xi Jinping said China needs to adapt to a “new normal” in the pace of economic expansion.

“He is trying to tell the world that China is adjusting itself to slower growth,” Vasu Menon, vice president of wealth management in Singapore at Oversea-Chinese Banking Corp., said of Xi’s comments. “He seems to be clearly sending a message that the economy needs reform, clearing a lot of issues such as credit, shadow banking, property market and excess capacity in some industries.”

BYD Co., a mainland electric-car maker backed by Warren Buffett, climbed 5.5 percent in Hong Kong, leading gains among mainland shares traded in the city. Samsung Electronics Co., Asia’s biggest technology company, gained 4 percent in Seoul as Chairman Lee Kun Hee was reported to be stable after surgery following a heart attack. DeNA Co. slumped 20 percent in Tokyo after the online-gaming network operator forecast operating profit that missed estimates.

Strategic Opportunity

China’s growth fundamentals haven’t changed and the country is still in a “significant period of strategic opportunity,” Xi said, according to a Xinhua News Agency report on the central government website on May 10. At the same time, the government must prevent risks and take “timely countermeasures to reduce potential negative effects,” he said.

The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong jumped 1.5 percent, with BYD surging 5.5 percent to HK$39. The Hang Seng Index added 1.8 percent, while the Shanghai Composite Index soared 2.1 percent. Data on China’s retail sales and industrial production for April are due tomorrow.

Japan’s Topix index fell 0.7 percent after data showed the nation’s current-account surplus narrowed to 116.4 billion yen ($1.1 billion) in March from 612.7 billion yen the month before. The yen slipped 0.1 percent to 101.96 per dollar today after weakening 0.2 percent on May 9.

South Korea’s Kospi index rose 0.4 percent. Australia’s S&P/ASX 200 Index declined 0.2 percent, and New Zealand’s NZX 50 Index added 0.2 percent.

Earnings Season

The MSCI Asia Pacific Index, which includes Japan, lost less than 0.1 percent after rising as much as 0.2 percent. Among companies on the Asian gauge that reported quarterly results since April 1 and for which Bloomberg had estimates, 52 percent beat projections for profit.

Samsung Electronics rose 4 percent to 1.388 million won in Seoul. Lee, 72, was operated on early yesterday after being resuscitated following an acute myocardial infarction, Samsung Group spokeswoman Rhee So Eui said in an e-mailed statement.

DeNA plunged 20 percent to 1,302 yen in Tokyo after forecasting a 62 percent drop in first-quarter operating profit as players shift away from the company’s browser titles. Operating profit will probably be 6.5 billion yen in the three months ending June, the company said May 9 after the market closed, missing the 10.6 billion yen average estimate of analysts surveyed by Bloomberg.

NSK Ltd. surged 9.7 percent to 1,145 yen, its biggest advance in a year, after the Japanese bearings maker forecast full-year profit above estimates. The company expects net income to rise 60 percent from a year earlier to 50 billion yen, compared with analysts’ estimate of about 47 billion yen.

U.S. Shares

Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. The measure advanced 0.2 percent on May 9 while the Dow Jones Industrial Average rose to a record.

Dennis Lockhart, president of the Atlanta Fed, said he expects the central bank will use a reverse-repurchase program when it eventually begins to tighten monetary policy. Lockhart, who doesn’t vote on policy this year, told reporters yesterday after a speech in Dubai that reverse repos may play a role in influencing short-term rates.

The MSCI Asia Pacific Index traded at 12.6 times estimated earnings as of May 9 compared with 15.9 for the S&P 500 and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

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