Asian stocks rose, with Japanese shares surging to the highest closing level in 4 1/2 years, after the Bank of Japan’s new governor announced unprecedented monetary easing to end two decades of economic stagnation.
Japan’s Nikkei 225 Stock Average (NKY) surged 1.6 percent to 12,833.64, after earlier climbing above 13,000 for the first time since August 2008, as the yen fell against all its major peers. Exporters Toyota Motor Corp. jumped 3.4 percent and Canon Inc. rose 1.5 percent. Hong Kong’s Hang Seng Index fell 2.6 percent amid concern an outbreak of bird flu that has killed six people in China may cause an epidemic.
The MSCI Asia Pacific Index climbed 0.4 percent to 134.11 as of 3:12 p.m. in Tokyo, paring this week’s drop to 1.1 percent. Benchmark stock indexes fell outside Japan. Hong Kong’s market reopened today, while markets in China and Taiwan remain closed for a holiday.
“It’s a typhoon of cash globally,” said Jason Brady, a fund manager who helps oversee about $84 billion in assets at Thornburg Investment Management Inc. in Santa Fe, New Mexico. “Central banks everywhere are doing the exact same thing. You have to believe that all of this printing or all of this stimulus is actually going to lead to sustainable economic growth.” He spoke in a Bloomberg TV interview with Susan Li.
The MSCI Asia Pacific Excluding Japan Index fell 1.3 percent to 461.89, taking its loss this week to 2.3 percent. Australia’s S&P/ASX 200 Index (AS51) declined 0.5 percent, Sinagpore’s Straits Times Index retreated 0.3 percent and New Zealand NZX 50 Index advanced 0.1 percent.
South Korea’s Kospi index slid 1.6 percent, heading for the largest weekly decline in 10 months, as the risk of conflict with North Korea spurred capital outflows.
The Bank of Japan yesterday boosted its stimulus program, saying it will double the monetary base within two years. European Central Bank President Mario Draghi yesterday signaled the ECB will keep monetary policy loose for an extended period and that further easing is possible if economic conditions deteriorate. The Federal Reserve last month said it will continue buying U.S. securities at a rate of $85 billion per month, and will keep buying until the labor market improves “substantially.”
An expansion of monetary easing at the Bank of Japan may trigger “an avalanche” in the yen as Japanese put money elsewhere in anticipation of sustained currency depreciation, billionaire investor George Soros said.
Toyota Motor, the world’s largest carmaker, advanced 3.4 percent to 5,090 yen and Canon gained 1.5 percent to 3,290 yen. The yen earlier weakened to 97 per dollar for the first time since August 2009. A decline in the currency boosts the value of Japanese export earnings when repatriated from abroad.
Japanese banks and property companies rose as optimism grew that action by the country’s central bank and government will increase asset prices. Mizuho Financial Group Inc. jumped 1.5 percent to 209 yen and Sumitomo Mitsui Financial Group Inc. surged 4.8 percent to 4,150 yen. Mitsui Fudosan Co. (8801) climbed 13 percent to 3,310 yen.
Trading volume on the Nikkei 225 was more than double the 30-day average, according to data compiled by Bloomberg.
The MSCI Asia Pacific Index (MXAP), the regional benchmark gauge, climbed the past five months as Japanese shares increased on speculation the nation will deploy more stimulus and amid signs the U.S. economy is recovering.
That left the gauge yesterday trading at 13.3 times average estimated earnings compared with 14.1 for the Standard & Poor’s 500 Index and 12.5 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the S&P 500 Index (SPX) slid 0.2 percent. The gauge added 0.4 percent yesterday as central banks in Japan and Europe reassured investors that they will keep economies awash in cash to bolster growth.
A U.S. government report today is forecast to show a gain of 190,000 in U.S. payrolls last month, following a 236,000 advance in February, according to economists surveyed by Bloomberg. The jobless rate probably probably remained at 7.7 percent.
Seven & I Holdings Co. (3382) surged 10 percent to 3,400 yen, the highest since 2008, after the owner of the 7-Eleven convenience- store brand said a weaker yen and adding stores in Japan and overseas will help boost profit to a record this year.
China Southern Airlines Co., the country’s biggest domestic carrier, lost 7.6 percent to HK$3.91 in Hong Kong and Cathay Pacific Airways Ltd. (293) slid 4.1 percent to HK$12.28. Six people have died from a new strain of bird flu that emerged in eastern China as authorities detected the virus in pigeon samples collected at a marketplace.
“We are pretty much in a panic mode from a possible epidemic from the new bird flu in China.” said Jackson Wong, vice president at Hong Kong-based brokerage Tanrich Securities Co., noting the sell-off in Hong Kong was probably worsened because Chinese markets are closed for a holiday. “Investors cannot sell A-shares today so the only thing they can do is sell their H-share counterparts.”
PetroChina Co. (857), Asia’s biggest company by market value, sank 3.9 percent to HK$9.88 in Hong Kong and Cnooc Ltd., China’s No.1 offshore producer of oil, lost 4.4 percent to HK$14.28. Crude oil traded near a two-week low and is headed for its biggest weekly drop since October after U.S. inventories climbed to a 22-year high, raising concerns that slower economic growth may weaken fuel demand.
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