Bloomberg News

Asia Stocks Outside Japan Retreat; Nikkei 225 Advances

November 16, 2012

Asian Stocks Rise on Optimism Japan Election Will Spur Stimulus

A showroom employee walks near a Honda Motor Co. Fit hybrid vehicle displayed at the company's showroom in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Asian equities outside of Japan slipped as investors waited to see how China’s new leaders will manage the world’s second largest economy. Japan’s Nikkei 225 Stock Average surged the most in two months amid speculation an election next month will hand power to an opposition party that advocates more economic stimulus.

Citic Securities Co., China’s top brokerage, dropped 2.3 percent. Kirin Holdings Co. (2503) lost 2.2 percent after the beverage maker formed part of a takeover bid for Fraser & Neave Ltd. Honda Motor Co., Japan’s third-largest carmaker, advanced 5.1 percent as the yen weakened, boosting the earnings outlook for the exporter.

The MSCI Asia Pacific Excluding Japan Index (MXAPJ) lost 0.4 percent to 431.98 as of 7:30 p.m. in Tokyo, extending this week’s decline to 2.2 percent. The gauge extended losses for a second day as China’s Communist Party appointed new leaders.

“A lot of China’s leaders are new and there’s been little coverage on their current positions,” said Tim Leung, a portfolio manager who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “I’m quite sure in the longer term we will notice the change, but it’s very difficult to make predictions at this point.”

The MSCI Asia Pacific Index (MXAP), which includes Japanese companies, rose 0.4 percent today, paring this week’s losses to 1.1 percent. The gauge gained 9.5 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur economic growth and data showed a slowdown in China may be ending.

Australia’s S&P/ASX 200 Index (AS51) slipped 0.3 percent. South Korea’s Kospi Index lost 0.5 percent, while Taiwan’s Taiex Index fell 0.2 percent. Singapore’s Straits Times Index was little changes after the government said growth this year will be at the lower end of a its forecast and the expansion in 2013 may hold near a three-year low.

Leadership Change

China’s Shanghai Composite Index (SHCOMP) dropped 0.8 percent, while Hong Kong’s Hang Seng Index added 0.2 percent. The Communist Party named Xi Jinping as general secretary on yesterday, putting him in line to become president, while Vice Premier Li Keqiang is forecast to replace Premier Wen Jiabao.

Japan’s Nikkei 225 Stock Average extended yesterday’s surge, rising 2.2 percent, with volume 62 percent above its 30- day average. Japan’s broader Topix Index jumped 1.9 percent, posting its biggest two-day gain since March 2011. Japan’s yen traded near its lowest level against the U.S. dollar since April.

Prime Minister Yoshihiko Noda will dissolve parliament today, triggering an election on Dec. 16 that polls suggest his Democratic Party of Japan will lose. Shinzo Abe, the leader of the main opposition LDP, called yesterday for the central bank to pursue unlimited monetary stimulus to end deflation and revive an economy that shrank last quarter at the fastest pace since the 2011 earthquake.

“The opposition Liberal Democratic Party is likely to win the upcoming Japanese election and implement more aggressive monetary and fiscal action,” said Matthew Sherwood, Perpetual Investment’s head of markets research in Sydney. Perpetual manages about $25 billion.

U.S. Futures

Futures on the Standard & Poor’s 500 Index added 0.3 percent today. The S&P 500 fell 0.2 percent yesterday as Wal- Mart Stores Inc. forecast earnings that missed estimates and lawmakers prepared for budget talks.

Shares on the Asian benchmark index traded at 13.2 times, compared with 13 times for the S&P 500 Index and 11.9 times for Stoxx Europe 600.

Chinese brokerages dropped amid concern that the appointment of Wang Qishan as the head of China’s ruling party’s discipline body would stifle reforms. Wang has a track record of implementing market-oriented reforms in the past and his reassignment dashes hopes for economic reforms, Adam Wolfe, a senior economist for Asia at Roubini Global Economics, wrote in an e-mail on Nov. 15.

Citic Securities dropped 2.3 percent to HK$14.50 in Hong Kong. Haitong Securities Co., the nation’s second-biggest brokerage, slipped 1.6 percent to HK$10.08.

F&N Takeover

Kirin sank 2.2 percent to 969 yen in Tokyo and Fraser & Neave gained 1.6 percent to S$9.28 in Singapore. Kirin is seeking to acquire Fraser & Neave’s food and beverages unit as part of the proposed takeover.

The takeover group, led by Singapore’s Overseas Union Enterprise Ltd., offered S$13.1 billion for F&N, topping an offer from Thai billionaire Charoen Sirivadhanabhakdi, and said Tokyo-based Kirin will buy the food and beverage unit. OUE rose 3.2 percent to S$2.62 in Singapore.

Consumer discretionary companies accounted for the largest gains among 10 industry groups on the Asian benchmark. Honda rose 5.1 percent to 2,591 yen, Toyota Motor Corp. advanced 3.4 percent to 3,325 yen and Nissan Motor Co. climbed 5.1 percent to 738 yen.

Japanese banks gained after Bank of America Corp. strategist Michael Hartnett wrote in a report that the lenders’ shares are the best way to bet on a return of the LDP to power, Mizuho Financial Group Inc. advanced 1.6 percent to 128 yen and Mitsubishi UFJ Financial Group Inc. (8306) gained 2.8 percent to 366 yen.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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