Asian Stocks Advance for Fourth Day Amid Central Bank Optimism

  • Japanese equities rally again after BOJ's stimulus move Friday
  • Shanghai index drops after factory gauge misses estimates

Asian stocks rose, with the regional benchmark index heading for its fourth day of advances, as shares in Tokyo extended Friday’s rally after the Bank of Japan stepped up its monetary stimulus.

The MSCI Asia Pacific Index gained 1 percent to 122.59 as of 4:03 p.m. in Hong Kong, extending its longest winning streak of the year as optimism grew that central banks around the world will support financial markets. Chinese shares extended their steepest monthly selloff since the global financial crisis after an official manufacturing gauge missed estimates.

Policy makers took the sting out of the worst start to a year since 2009 for global equities, helping to ease a selloff that wiped more than $5 trillion from market value. The European Central Bank’s indication it could expand stimulus as soon as March was followed by the Federal Reserve standing pat on interest rates and noting its concern over the global situation. The BOJ shocked investors Friday by joining the ECB in imposing negative rates, a strategy once considered unthinkable among central bankers that’s aimed at stoking spending.

“The BOJ’s action on Friday helped -- it’s a situation where you get short-term relief when central banks make supportive announcements or ease policy,” Steven Milch, chief economist at Suncorp Wealth Management in Sydney, said by phone. “I’m not sure central bank actions are a panacea, but they do help in relation to investor sentiment. Uncertainty is clearly very high and it is possible that some markets have overshot on the downside. There’s a possibility that risk aversion and volatility diminish as we go forward.”

Regional Gauges

Japan’s Topix index jumped 2.1 percent, adding to Friday’s 2.9 percent surge, as the yen maintained losses near a six-week low. Major lenders fell again following the central bank’s decision to start charging for some of their deposits held at the institution. The Topix Banks Index has dropped 8.5 percent over two days, the most since August.

South Korea’s Kospi index advanced 0.7 percent. Australia’s S&P/ASX 200 Index gained 0.8 percent. New Zealand’s benchmark gauge and Taiwan’s Taiex index both increased 0.1 percent. Singapore’s Straits Times Index lost 0.8 percent. Hong Kong’s Hang Seng Index fell 0.5 percent.

The Shanghai Composite Index slumped 1.8 percent, while the Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong declined 1.2 percent. The nation’s manufacturing purchasing managers’ index dropped to a three-year low of 49.4 in January, compared with the median estimate of 49.6, raising the stakes for policy makers struggling to prop up the economy amid a second bear market in stocks since June and a currency at a five-year low.

Deteriorating Conditions

“Operating conditions continue to deteriorate at a modest pace, while output and employment both contract at faster rates,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong. “The Chinese government will do what it can to try and steer its economy to a rebound. But they face huge issues like state-owned enterprise reform and growing the service sector at a time when cadres are reluctant to act in the face of anti-corruption clampdowns.”

NTT Docomo Inc. jumped 14 percent in Tokyo, its biggest gain in almost 16 years, after Japan’s biggest mobile phone carrier said it will buy back as much as 500 billion yen ($4.1 billion) of its own shares. Sony Corp. jumped 12 percent after the maker of PlayStation game consoles reported third-quarter earnings that beat analyst estimates. PetroChina Co. fell 3 percent in Hong Kong after the country’s largest oil and gas producer said 2015 profit may fall as much as 70 percent due to the slump in energy prices.

E-mini futures on the Standard & Poor’s 500 Index retreated 0.3 percent on Monday. The U.S. equity benchmark gained 2.5 percent on Friday, with earnings from Microsoft Corp. exceeding forecasts.

Oil fell as much as 2.5 percent on Monday in New York, erasing earlier gains of as much as 1.7 percent, amid signs of faltering industrial activity in China, the world’s biggest energy consumer.

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