Asian Stocks Advance Amid Japan Central Bank Stimulus Optimism

  • Japan gains push Topix index to highest level since August
  • Hong Kong market closed for holiday, mainland China open

Asian stocks rose, led by gains in Japanese shares, amid optimism that weak trade data will spur the Bank of Japan into boosting its stimulus program. Chinese shares slumped.

LG Electronics Inc. surged 14 percent in Seoul after General Motors said it chose the South Korean firm as a partner in developing its Chevrolet Bolt electric vehicle. Toyota Motor Corp. and Honda Motor Co., which get more than three-quarters of sales outside Japan, rose at least 2 percent in Tokyo, the largest contributors to gains in the regional gauge.

The MSCI Asia Pacific Index rose 0.6 percent to 134.54 as of 5:02 p.m. in Tokyo. Japan’s Topix index advanced 1.8 percent to the highest level since August as data showed exports rose less than analysts expected in September from a year earlier. The trade report is one of the most crucial economic indicators before the Bank of Japan meets on Oct. 30 to consider whether the nation needs more monetary stimulus to stoke inflation and economic growth.

“The fact that the exports were so poor was quite a big surprise to us,” Kelvin Tay, chief investment officer for South Asia Pacific at UBS Wealth Management, told Bloomberg TV in Singapore. “The BOJ will probably have to do a lot more to expand quantitative easing, debasing the yen some more to boost exports.”

Japan's QE program has underpinned stock gains

The MSCI Asia Pacific gauge surged 8 percent this month through Tuesday, on course for its best monthly advance since September 2010, as Chinese shares rallied and traders pushed back expectations on the timing of the Federal Reserve’s interest-rate increase.

South Korea’s Kospi index and Australia’s S&P/ASX 200 Index added 0.2 percent. New Zealand’s S&P/NZX 50 Index rose 0.4 percent. Singapore’s Straits Times Index gained 0.1 percent and India’s S&P BSE Sensex Index fell 0.2 percent. Hong Kong markets are shut today for a holiday.

The Shanghai Composite Index declined 3.1 percent, falling from an eight-week high, as investors weighed whether the recent rebound had gone too far.

“This correction is normal, considering the recent decent performance,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “Investors seem to be moving into more defensive sectors, with growth stocks underperforming the overall market.”

E-mini futures on the Standard & Poor’s 500 Index gained 0.1 percent. The underlying gauge lost 0.1 percent on Tuesday. International Business Machines Corp. dropped 5.8 percent in New York after lowering its full-year profit forecast. Harley-Davidson Inc. sank 14 percent after its results disappointed, while Yum! Brands Inc. rose 1.8 percent after saying it will split its China business off into a separate publicly traded company.

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