Asian Stocks Advance as Chinese Shares Rally on Stimulus Bets

Can China Rein In Its Stock Rally?

Asian stocks climbed, with the regional benchmark index extending a seven-year high, after U.S. equities advanced to records and Chinese stocks surged on bets the government will do more to support growth.

PetroChina Co. and China Petroleum & Chemical Corp., the nation’s biggest energy companies, jumped at least 6.7 percent in Hong Kong amid speculation the government is considering merging state-owned enterprises. HSBC Holdings Plc gained 3.6 percent in Hong Kong after the Sunday Times newspaper reported the lender is considering spinning off its U.K. retail bank. Fortescue Metals Group Ltd. surged 16 percent, the most since September 2012, after iron ore entered a bull market on Friday.

The MSCI Asia Pacific Index rose 0.2 percent to 156.37 as of 4:10 p.m. in Hong Kong after closing Friday at its highest since January 2008. The Nasdaq Composite Index and the Standard & Poor’s 500 Index closed at all-time highs as Google Inc., Microsoft Corp. and Inc. rallied on quarterly results. E-mini futures on the S&P 500 added 0.1 percent today.

“Markets are going to move higher until we get some news that stops them,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “The reporting season in the U.S. so far looks OK. There’s not been any show stoppers yet,” he said. “Greece has the potential to put things on hold.”

Greece will look for ways to assemble enough cash to pay pensioners and employees this week after euro area finance ministers on Friday said they won’t disburse more aid until bailout terms are met. While focus now turns on a May 6 interest repayment to the International Monetary Fund and the next Eurogroup meeting on May 11 in Brussels, the country has a number of funding hurdles to clear before then and beyond.

China Rally

The Shanghai Composite Index advanced 3 percent to the highest close since February 2008 on speculation China will reform state companies and keep borrowing costs low. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong climbed 1.7 percent, while the city’s benchmark Hang Seng Index rose 1.3 percent.

China may cut the number of centrally administered SOEs to 40 from the current 112 through mergers and restructuring, the Economic Information Daily reported. The central bank is discussing adopting unconventional policies to rebuild its balance sheet and reinvigorate the economy, including making direct purchases of local government bonds from the market, according to a separate report by Market News.

“The central bank may be shifting its priority to keeping liquidity loose to ensure economic growth targets are met,” said Deng Haiqing, a Citic Securities Co. analyst in Beijing.

Jakarta Slump

Australia’s S&P/ASX 200 Index gained 0.8 percent. Taiwan’s Taiex index advanced 0.6 percent. Singapore’s Straits Times Index and Japan’s Topix index were both little changed. South Korea’s Kospi index slid 0.1 percent. Markets in New Zealand were closed for a holiday.

The Jakarta Composite Index dropped 3.6 percent, heading for its biggest decline since August 2013, on concern an economic slowdown will damp earnings growth. PT Bank Mandiri and PT Bank Central Asia, the nation’s biggest banks by market value, dropped more than 4.9 percent.

“Investors are adjusting to the reality that the economy is really slowing down,” Jeffrosenberg Tan, portfolio manager at PT Sinarmas Asset Management, said by phone from Jakarta Monday. “We’ve been cutting back our positions in stocks.”

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