Asian Stocks Advance as Investors Shrug Off Turkey Concerns

  • Energy, financial companies lead gains among Asian shares
  • Taiwanese stock index advances to extend bull market

Asian stocks outside Japan rose toward the highest level since October, following a failed coup attempt in Turkey, as energy and financial companies advanced.

The MSCI Asia Pacific Excluding Japan Index added 0.4 percent to 433.42 at 4:04 p.m. in Hong Kong, its sixth day of gains. Turkish officials over the weekend sought to prevent a selloff by promising unlimited liquidity to lenders and measures to support the lira. Vietnamese equities traded near their highest levels since 2008, while Taiwanese shares extended gains after entering a bull market Friday. Indian and Australian stocks climbed to 11-month highs. Markets in Japan and Thailand were closed for holidays. 

The thwarted coup attempt came after global equities recovered from a rout that wiped out more than $4 trillion in market value since June’s shock U.K. vote to leave the European Union. Expectations grew that policy makers will act to boost growth and as data showed China’s economy is stabilizing. The gauge of Asian shares excluding Japan last week surged 4.5 percent in its best weekly rally in four months.

“I doubt the failed Turkish coup can dampen market sentiment much. Military coups in Turkey aren’t that uncommon,” Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $120 billion, said by phone. “I’m surprised how quickly markets recovered from the Brexit shock. This tells me that central banks are not out of ammunition and have plenty of tools available to calm the markets.”

Turkey’s President Recep Tayyip Erdogan ordered reprisals after the attempted takeover by the military led to the deaths of about 200 people and so far more than 6,000 people, including members of the judiciary, have been detained.

The Asian stocks rally boosted the value of shares on MSCI Asia Pacific Index to 13.9 times estimated earnings, compared with an average multiple of 13.3 times in the past three years.

“The failed coup in Turkey has a very limited impact on market sentiment as it’s mainly a domestic issue that they’ve seem to have settled quickly,” Margaret Yang, an analyst at CMC Markets in Singapore, said by phone. “We’ve seen some encouraging data out of the U.S. and China last week and that should help push the market higher.”

Taiwan’s Taiex index increased 0.7 percent, taking the advance from the August low to 22 percent. South Korea’s Kospi and Singapore’s Straits Times Index each added 0.2 percent. Australia’s S&P/ASX 200 Index gained 0.5 percent, as did New Zealand’s S&P/NZX 50 Index. India’ S&P BSE Sensex climbed 0.3 percent.

Hong Kong’s Hang Seng Index rose 0.7 percent, while the Hang Seng China Enterprises Index climbed for a sixth day to a three-month high. The gauge capped its steepest weekly advance in four months on Friday after a report showed Asia’s largest economy expanded more than expected in the second quarter.

China Housing

China’s Shanghai Composite Index slipped 0.4 percent as property developers declined on signs the nation’s housing market is cooling. Home-price gains in the mainland tapered off last month, as second-tier cities joined some of the nation’s largest hubs in imposing housing curbs. Prices in the mainland in June rose month-on-month in 55 out of 70 cities, compared with 60 cities in May, data released Monday showed. 

Reliance Industries Ltd. climbed 0.7 percent in Mumbai after the operator of the world’s biggest oil-refinery complex reported first-quarter profit increased. China Minsheng Banking Corp. jumped 3.4 percent in Hong Kong after the vice-chairman of the nation’s first privately-owned lender bought additional shares. 

Lenovo Group Ltd. surged 7.6 percent on speculation the computer maker’s virtual reality business will benefit from the popularity of Pokemon Go. Malaysia Airports Holdings Bhd., which owns the Istanbul Sabiha Gokcen International Airport in Turkey, tumbled 4.8 percent in Kuala Lumpur.

Futures on the S&P 500 Index climbed 0.4 percent. The U.S. equity benchmark index slipped 0.1 percent on Friday, halting a five-day rally that took it to a record. Before Friday’s hiccup, the S&P 500 Index closed at record highs on four consecutive days, something that hadn’t happened since November 2014, as data released last week on retail sales and manufacturing added to signs the world’s biggest economy is gaining traction.

Brent crude held below the highs reached following a failed coup in Turkey last week as shipments continued through the vital conduit for oil from Russia and Iraq to the Mediterranean Sea.

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