Asian Stocks Jump as Japan's Topix Rallies the Most Since 2008

  • Chinese shares sink as markets reopen after New Year's holiday
  • Topix surges 8 percent on speculation selloff went too far

Asian stocks headed for the biggest advance in almost seven years as Japanese shares rallied the most since the financial crisis amid increasing speculation that equities were oversold. Chinese shares fell as markets reopened after the New Year’s holiday.

The MSCI Asia Pacific Index gained 4.3 percent to 117.82 as of 7:13 p.m. in Hong Kong, following a 6.2 percent slide last week. Japan’s Topix index soared 8 percent, the most since 2008, after the biggest weekly loss since the financial crisis pushed a gauge of volatility to the highest level in five years.

“Shares have become oversold again and due for at least a bounce which may now be getting under way,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $120 billion. “Beyond the near-term uncertainties, we still see shares trending higher this year helped by a combination of relatively attractive valuations compared to bonds, further global monetary easing and continuing moderate economic growth.”

The Topix rose for the first time in four days, and the Nikkei 225 Stock Average jumped 7.2 percent after a report showing the Japanese economy shrank more than expected last quarter boosted the outlook for central bank stimulus. The nation’s gross domestic product fell 1.4 percent in the fourth quarter on an annualized basis, more than economists’ forecast for a 0.8 percent contraction. Traders also pointed to signs that shares are oversold after posting the worst weekly slump since 2008.

Toyota Surges

Gains were broad-based across all 10 industry groups on the MSCI Asia Pacific gauge, led by consumer discretionary and industrial companies. Toyota Motor Corp. climbed 9.6 percent, the biggest boost to the index, as the yen weakened for a second day. Megabank Mitsubishi UFJ Financial Group Inc., which had fallen 41 percent this year through Friday, jumped 8.7 percent.

Investors said last week’s declines in Tokyo to below key levels triggered margin calls among retail traders in Japan, who were being automatically forced to close souring bets.

The Shanghai Composite Index fell 0.6 percent as markets reopened, giving traders the first opportunity to react to global turmoil that has sent the MSCI All-Country World Index down 20 percent from its record in May. The gauge crawled back from a drop of as much as 3 percent from earlier in the day.

Calming Expectations

“It’s a little bit of catch up for obvious reasons, given the rout,” George Boubouras, chief investment officer at Contango Asset Management in Melbourne, told Bloomberg TV. “The accommodative language coming out of the PBOC at the weekend is all quite a good thing. They need to create some stability around their currency for obvious reasons. Anything that calms expectations going forward and tries to indicate that the PBOC is trying to get it under control, is a positive.”

China’s central bank has stepped up efforts to restore stability to the nation’s currency and economy, with Governor Zhou Xiaochuan breaking his long silence to say there’s no basis for continued yuan depreciation. The nation’s balance of payments is good, capital outflows are normal and the exchange rate is basically stable against a basket of currencies, Zhou said in an interview published Saturday in Caixin magazine.

Data on Monday showed a slide in China’s exports in January was eclipsed by an even bigger tumble in imports, leaving a record trade surplus for the world’s biggest trading nation. The decrease in exports suggests the yuan’s depreciation since August has yet to result in a sustained boost to the competitiveness of China’s factories.

Hong Kong Jumps

Hong Kong’s Hang Seng Index jumped 3.3 percent, the most since September. The gauge traded at the lowest level since 2012 on Friday. The Hang Seng China Enterprises Index rallied 4.8 percent, after dropping 6.8 percent over the previous two sessions.

South Korea’s Kospi index rose 1.5 percent. Australia’s S&P/ASX 200 Index advanced 1.6 percent and New Zealand’s S&P/NZX 50 Index climbed 1.7 percent. Singapore’s Straits Times Index rose 2.7 percent, while Taiwan’s Taiex closed little changed.

Futures on the Standard & Poor’s 500 Index gained 1.5 percent, with U.S. markets closed Monday for a holiday. The benchmark gauge jumped 2 percent on Friday to halt the longest losing streak since September, as data showed retail sales increased for a third month in January.

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