Asian Stocks Extend Gains as China Equities Join Global Rally

  • SoftBank soars to upper limit of 16% on buyback plan
  • Topix pares gains while energy producers climb with oil

Is the Worst Over for Global Markets?

Asian stocks rose, extending a rally that lifted the regional equities gauge from the lowest level since 2012, as Chinese stocks jumped the most in three months and SoftBank Group Corp. surged.

The MSCI Asia Pacific Index rose 0.9 percent to 118.56 as of 4:04 p.m. in Hong Kong, after gaining 4.1 percent Monday for the biggest advance since September. China stocks rallied 3.3 percent after data showed the nation’s banks doled out a record amount of loans in January. Japan’s Topix increased as SoftBank soared 16 percent after announcing a buyback plan.

Stocks are climbing again after global equities tumbled into a bear market last week, as investors speculate the selloff was overdone and grow more confident central banks will do whatever is necessary to support markets. European Central Bank President Mario Draghi reiterated on Monday his willingness to act should financial turmoil threaten price stability.

“There’s enough value starting to emerge in certain areas that investors eventually start to take advantage of that,” said Sean Fenton, Sydney-based fund manager at Tribeca Investment Partners. “We are starting to find a little bit of a bottom to this trading range. Central banks will try to calm the markets down a little bit and then investors will start to step back in again.”

Shares in Tokyo continued to show dramatic swings, after soaring 8 percent Monday for the biggest one-day rally since October 2008. The Topix index erased a drop of 1.2 percent during morning trading as SoftBank surged. The gauge soared as much as 2.2 percent before paring to close with a gain of 0.4 percent.

The Japanese equity market has become more volatile than China, Greece and Argentina. The measure has swung more than 3 percent each day in the past six sessions as volatility in global markets gets funneled through the yen and then reflected back into the nation’s stocks.

SoftBank surged 16 percent after the Japanese wireless carrier said it is prepared to spend a record 500 billion yen ($4.4 billion) buying back stock after its shares dropped to their lowest since buying Sprint Corp. in 2013. SoftBank will purchase as many as 167 million shares, or 14.2 percent of its stock, using cash holdings and the proceeds of asset sales.

The Topix is also benefiting from data this week showing gross domestic product shrank an annualized 1.4 percent in the latest quarter, which boosted prospects the Bank of Japan will step in with more stimulus.

“The Bank of Japan does have the capacity to increase its easing program as economic growth slows,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “We see some further stimulus, not only from the Bank of Japan, but also in Europe and we don’t see U.S. interest rates rising in the next six months or so.”

Stimulus Speculation

Speculation is also intensifying that China’s government will add to monetary and policy stimulus after data on Monday showed a slide in exports. Premier Li Keqiang said his country will take decisive actions when needed, while the Economic Information Daily reported policy makers are expected to release a package of monetary, fiscal and tax policies to ensure economic growth is in a reasonable range this year.

The Shanghai Composite Index climbed the most since Nov. 4, paring its decline for the year to 20 percent. The Hang Seng China Enterprises Index rose 2.1 percent, extending a two-day gain to 7 percent, the most since September.

New yuan lending jumped to 2.51 trillion yuan ($390 billion) last month, beating the median estimate of 1.9 trillion yuan in a Bloomberg survey. The yuan strengthened Monday by the most since a dollar peg was scrapped in 2005 after People’s Bank of China Governor Zhou Xiaochuan talked up the credentials of the world’s second-largest economy.

Regional Gauges

The Hang Seng Index gained 1.1 percent and Taiwan’s Taiex Index advanced 1.8 percent. South Korea’s Kospi index gained 1.4 percent after the central bank kept its benchmark interest rates on hold. Australia’s S&P/ASX 200 Index added 1.4 percent. New Zealand’s S&P/NZX 50 Index climbed 0.7 percent and Singapore’s Straits Times Index gained 1.3 percent.

Sembcorp Marine Ltd., which posted its first loss in more than a decade in the fourth quarter, jumped 7.2 percent amid speculation the company could be taken private.

PetroChina Co. advanced 6.4 percent in Hong Kong as energy companies rallied. Crude oil extended its advance, adding 5.3 percent amid prospects of a meeting between Saudi Arabia and Russia.

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