Asian Stocks Rise to Biggest Gain This Year on ECB Plan
Asian stocks rose, with the regional benchmark index posting its biggest gain since December as Europe’s plan to reduce borrowing costs, better-than-estimated U.S. jobs data and Chinese stimulus measures boosted the earnings outlook for Asian exporters.
Hutchison Whampoa Ltd., which operates retailers, phone companies and ports in Europe, rose 3.7 percent in Hong Kong. China Resources Cement Holdings Ltd. jumped 14 percent in Hong Kong after the mainland government approved road projects. Toyota Motor Corp. (7203), a carmaker that depends on North America for 25 percent of its sales, added 3.4 percent.
The MSCI Asia Pacific Index rose 2.2 percent to 118.51 as of 7:07 p.m. in Tokyo, its biggest gain since Dec. 1. About six stocks advanced for each that fell on the gauge, which has risen 0.6 percent this week. More than 80 companies on the regional gauge had their biggest daily advances in at least six months today.
The bond plan “takes another European crisis episode off the table for at least the rest of this year,” said Andrew Pease, chief investment strategist at Russell Investment Group in Sydney, which manages about $150 billion. “It does minimize the tail risk in Europe. There’s no doubt about it.”
The Asia Pacific measure fell 1.1 percent this quarter through yesterday as signs of a global economic slowdown outweighed expectations for further stimulus measures. The Asian benchmark traded at 12.1 times estimated earnings, compared with 13.8 times for the Standard & Poor’s 500 Index (SPXL1) and 11.9 times for the Stoxx Europe 600 Index.
The Shanghai Composite Index climbed 3.7 percent. Hong Kong’s Hang Seng Index added 3.1 percent. Taiwan’s Taiex Index (TWSE) rose 1.3 percent and Singapore’s Straits Times Index gained 0.9 percent.
Japan’s Nikkei 225 Stock Average rose 2.2 percent. South Korea’s Kospi Index (KOSPI) advanced 2.6 percent. Australia’s S&P/ASX 200 added 0.3 percent and New Zealand’s NZX 50 Index gained 0.8 percent.
Asian indexes followed gains in global stocks after European Central Bank President Mario Draghi yesterday said policy makers agreed to an unlimited bond-purchase program as they try to regain control of interest rates in the euro area. The program will target sovereign bonds with maturities of one to three years in its most ambitious plan yet to save the euro.
Futures on the S&P 500 gained 0.4 percent today. The index increased 2 percent to its highest level in four years in New York yesterday. Claims for U.S. jobless benefits fell, and a private report showed U.S. companies added more workers than forecast.
“The risk premium on Asia could be lifted for a little while,” saidDiane Lin, a fund manager with Sydney-based Pengana Capital Ltd., which oversees about $1.1 billion in global assets. “From that regard, it’s positive. But whether the ECB’s action itself is going to be sustainable and fundamentally improve the outlook, we still need to see.”
Exporters rallied. Hutchison Whampoa rose 3.7 percent to HK$69.40. Esprit Holdings Ltd. (330), a clothier that depends on Europe for 79 percent of its sales, rose 2.1 percent to HK$12.58.
Financial firms accounted for 27 percent of the gain in the Asia Pacific index. HSBC Holdings Plc (5), Europe’s biggest lender, rose 2.5 percent to HK$68.90 in Hong Kong. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advanced 2.5 percent to 363 yen.
Volatility for Asian equities declined. The Nikkei Stock Average Volatility Index (VNKY) dropped 8.2 percent to 19.18, indicating traders expect a swing of about 5.5 percent on the benchmark gauge over the next 30 days. Measures of anticipated price movements for the Hang Seng Index and Kospi Index also fell.
Cement companies advanced after China approved plans to build 2,018 kilometers (1,254 miles) of roads. China Resources Cement soared 14 percent to HK$3.90. Anhui Conch Cement Co., the country’s biggest supplier of the building material, rose 8.5 percent to HK$21.40.
Stocks linked to the U.S. advanced. Toyota rose 3.4 percent to 3,205 yen. James Hardie Industries SE (JHX), a building-materials supplier that gets 67 percent of sales from the U.S., added 2.3 percent to A$8.65. Man Wah Holdings Ltd., a sofa maker that depends on the world’s biggest economy for 51 percent of sales, rose 5 percent to HK$3.17.
Investors continue to gauge U.S. growth conditions after Federal Reserve Chairman Ben S. Bernanke said last week that he wouldn’t rule out more stimulus to boost employment if needed. U.S. Labor Department data today may show hiring slowed while the unemployment rate remained at 8.3 percent in August, according to forecasts by economists in a Bloomberg survey.
Chipmakers advanced, with SK Hynix Inc. climbing 7.7 percent to 22,500 won in Seoul. Shares rose after California- based OCZ Technology Group Inc. blamed a shortage of certain flash-memory components for lower-than-estimated sales of its disk drives. Toshiba Corp. (6502) advanced 7.3 percent to 251 yen in Tokyo after its chipmaking partner SanDisk Corp. gained 8.4 percent in the U.S.
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