Asian Stocks Rise to Two-Month High Before Central Banks Meet

  • China securities regulator pledged to keep supporting equities
  • Japanese shares gain after machine orders beat estimates

Asian stocks rose for a third day, led by Shanghai and Tokyo shares ahead of policy reviews by the Bank of Japan and the U.S. Federal Reserve.

The MSCI Asia Pacific Index climbed 1 percent to 128.02 as of 12:59 p.m. in London, the highest since Jan. 5. The focus now turns to policy decisions this week after stocks jumped on Friday as investors reevaluated the European Central Bank’s stimulus. Chinese data over the weekend showed industrial production and retail sales both slowed in the first two months of the year, highlighting the pressure leaders face to meet this year’s growth target.

“Central banks are going to be dominating market sentiment,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, told Bloomberg Radio. “That could be enough for the risk rally to continue, but I think it is starting to run out of steam. The Fed is going to be front and center” this week.

The Asian equity measure has pared its loss for 2016 to 3 percent, spurred by a rebound in oil, other commodities and banking shares. Stocks in Shanghai are still one of the worst performers among 93 primary indexes tracked by Bloomberg with a 20 percent drop this year.

Regional Gauges

Japan’s Topix index climbed 1.5 percent as machine orders surged more than expected and the yen slid 0.6 percent against the dollar on Friday. Japanese exporters advanced, with Sony Corp. and Toyota Motor Corp. rising at least 1 percent. Thirty-five of 40 economists surveyed by Bloomberg don’t expect a change in monetary policy at the end of the BOJ’s two-day meeting on Tuesday.

The Shanghai Composite Index jumped 1.8 percent after the new head of China’s securities regulator signaled he will keep propping up the equity market and developers announced acquisitions. Liu Shiyu, chairman of the China Securities Regulatory Commission, said it was too early to think about the state rescue fund leaving the market, while a new registration-based system for IPOs would take time. 

China’s industrial output rose 5.4 percent from a year earlier in January and February, the National Bureau of Statistics said Saturday, compared with the 5.6 percent median estimate of economists surveyed by Bloomberg. Retail sales climbed 10.2 percent from a year earlier, missing the 11 percent projected gain in the survey, while fixed-asset investment exceeded estimates with a 10.2 percent increase.

Credit Risk

China’s central bank Governor Zhou Xiaochuan warned banks about increased credit risk amid rising real-estate prices in the biggest cities, while saying “excessive” stimulus wouldn’t be needed to achieve the nation’s growth goal of at least 6.5 percent over the next five years.

“Liu’s vow to help with the market’s recovery brought back some investor confidence,” said Castor Pang, head of research at Core-Pacific Yamaichi Hong Kong. The economy is still looking “poor,” he said.

Hong Kong’s Hang Seng Index added 1.2 percent. Taiwan’s Taiex index gained 0.5 percent. Singapore’s Straits Times Index climbed 0.6 percent. South Korea’s Kospi index closed little changed. Australia’s S&P/ASX 200 Index added 0.4 percent, paring this year’s loss to 2.1 percent. New Zealand’s S&P/NZX 50 Index rose 0.8 percent.

PLDT Rallies

China Vanke Co. surged 10 percent in Hong Kong after the mainland’s biggest property developer announced plans to buy a stake in a unit of Shenzhen Metro Group Co. for as much as 60 billion yuan ($9.2 billion) in a deal that could thwart a hostile takeover bid. Philippine Long Distance Telephone Co. jumped 12 percent in Manila after talks between San Miguel Corp. and Telstra Corp. to enter the country’s telecommunications industry collapsed.

Futures on the Standard & Poor’s 500 Index fell 0.3 percent Monday, after the underlying index surged 1.6 percent on Friday to cap a fourth straight weekly advance that sent it to the highest since Dec. 31. Traders see a 4 percent chance of a Fed interest-rate increase at this week’s meeting. Central banks in the U.K., Switzerland and Norway also update on policy this week.

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