Asian Stocks Rise as Analysts See Positive Side of Trump Setback

  • President may have harder time restricting trade: First Metro
  • Region’s equities set to complete three-month advance

Goldman's Matsui Sees Japan Market as 'Hidden Gem'

Asian stocks advanced with materials and financial companies leading a rebound from Monday’s selloff. Japanese shares climbed the most in more than six weeks as the yen tempered its strength against the dollar.

The MSCI Asia Pacific Index rose 0.7 percent as of 3:02 p.m. in Hong Kong, erasing Monday’s 0.4 percent loss that was driven by concerns U.S. President Donald Trump will face an uphill battle on tax reform after failing to pass his health-care bill. Shares rebounded amid growing speculation Trump will also find it harder to renegotiate free-trade deals. Seven stocks rose for every two that retreated in the regional gauge with Japan’s Topix index and Australia’s benchmark measure pacing the recovery.

“Monday’s move was more of an exaggeration; it was a knee-jerk reaction driven by fears that Trump’s pro-growth policies will not be taking off,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “We are seeing a recovery from that sentiment as some investors have realized that a delay in Trump’s agenda gives a space of relief for Asia since his policies include restrictive trade measures that could hurt economies in the region.”

All 11 industry groups in the MSCI Asia Pacific gauge advanced except real estate shares. A gauge of materials companies increased 1.1 percent, paced by Hanwha Chemical Corp., which rallied 6.6 percent in Seoul after it was rated buy in Daishin Securities’ initial coverage. Goldman Sachs added the stock to its conviction list.

The MSCI Asia-Pacific Index has advanced 10 percent this year, heading for its sharpest quarterly rally since the three months ended March 2012. The measure is heading for a 2.4 percent gain this month. The gauge is trading at 13.8 times 12-month estimated earnings, compared with its five-year average of 12.7 times.

“Trump’s setback is supporting the outlook that the restrictive trade policies he seeks will not easily materialize and that’s supportive of global trade and markets,” said Cristina Ulang, head of research at First Metro Investment Corp. “This is an indication that Trump will face an uphill battle for the rest of his agenda like trade protectionism, which has helped drive a stronger dollar.”

Summary

  • Sunac China +9% in Hong Kong, poised for highest close since May 2015; co.’s 2016 net income beat the consensus estimate of 16 analysts
  • Aluminum Corp of China +4.7%; co. plans to keep cutting production costs this year to maintain margins, according to Yi Zhu, analyst at Bloomberg Intelligence
  • Hyosung Corp. +4%, sharpest gain since Oct. 4; rated buy in initial coverage of NH Investment & Securities
  • Topix +1.3%, biggest gain since Feb. 10; Nikkei 225 +1.1 in Tokyo; yen little changed at 110.64 to dollar
  • Hang Seng Index +0.4%; Hang Seng China Enterprises Index +0.6%; Shanghai Composite Index -0.4%
  • Australia’s S&P/ASX 200 Index +1.3%, highest close since May 2015; New Zealand’s S&P/NZX 50 Index little changed
  • India’s Sensex +0.6% as a gauge of communication stocks rose the most in over a week; Bharti Infratel +1.9% as funds advised by KKR, Canada Pension Plan Investment Board bought 10% of co. from Bharti Airtel
  • Kospi +0.4%; Taiwan’s Taiex little changed
  • KLCI Index +0.2%; SET Index +0.4%; Philippine Stock Exchange Index +0.8%; Singapore’s benchmark stock index + 0.7%; Vietnam’s VN Index -0.4%

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