Bloomberg News

Asia Stocks Head for Biggest Gain in Seven Months on BOJ

April 11, 2013

Asian stocks rose, with the regional benchmark index poised for the biggest gain in seven months, as the yen neared 100 to the dollar after the Bank of Japan (8301) said it will maintain stimulus and loan growth in China topped estimates.

Toyota Motor Corp., the world’s largest carmaker, added 5.8 percent even as it announced a recall for faulty airbags. Sharp Corp. (6753) jumped 7.9 percent in Tokyo as the Nikkei newspaper reported profit at the electronics manufacturer will exceed it forecasts. GS Engineering & Construction Corp. slumped 15 percent in Seoul after reporting an unexpected loss.

The MSCI Asia Pacific Index (MXAP) rose for a fourth day, gaining 1.5 percent to 137.98 as of 5:11 p.m. in Tokyo, with about two stocks increasing for each that fell. All 10 industry groups on the gauge advanced. The measure, headed for the highest closing level since August 2011, climbed the past five months on speculation Japan would unleash more stimulus and amid signs the U.S. economy is recovering.

“The odds are clearly stacked in favor of a continued rally in Japan,” said Mikio Kumada, Hong Kong-based global strategist for LGT Capital Management, which oversees more than $25 billion. The BOJ “has essentially scrapped existing rules and programs, replacing them with straightforward and expanded open-market purchases. This bold economic-policy shift has the potential to sustain the rebound.”

Regional Gauges

Japan’s Nikkei 225 Stock Average rose 2 percent to the highest closing level since July 2008 while the Topix Index capped a seven-day, 16 percent advance, biggest over that period of time since March 2009.

Australia’s S&P/ASX 200 Index gained 0.8 percent even as the country’s unemployment rate unexpectedly rose to 5.6 percent. New Zealand’s NZX 50 Index slipped 0.2 percent.

South Korea’s Kospi index gained 0.7 percent as the Bank of Korea kept borrowing costs unchanged for a sixth month, resisting pressure from the government for a reduction even as North Korean threats of war threaten to undermine confidence.

Hong Kong’s Hang Seng Index gained 0.3 percent and China’s Shanghai Composite slid 0.3 percent as China’s new local- currency loans last month exceeded economists’ forecasts.

The MSCI Asia Pacific Index yesterday traded at 13.8 times average estimated earnings compared with 14.3 for the Standard & Poor’s 500 Index and 12.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Bank of Japan Governor Haruhiko Kuroda said the central bank will take all steps necessary to meet a 2 percent inflation target even as he indicated policy adjustments are unlikely every month. The European Central Bank will keep rates low and continue injecting liquidity into the banking system, ECB governing council member Christian Noyer said.

Yen Weakens

“The biggest commitment is that we will take all necessary measures,” Kuroda told reporters in Tokyo yesterday, six days after announcing unprecedented stimulus to double the monetary base over two years. The central bank will tomorrow offer to buy Japanese government bonds with a maturity between five years and 10 years in addition to those with more than 10 years to maturity.

The yen fell to 99.73 per dollar, near the weakest level in four years. The prospect of the currency weakening to 130 per dollar isn’t unreasonable, Jonathan Beinner, of Goldman Sachs Group Inc. in New York, said on Bloomberg Television.

Japanese exporters climbed. Canon Inc. (7751), a Japanese camera maker that gets 80 percent of sales abroad, gained 4.2 percent to 3,695 yen and Toyota added 5.8 percent to 5,640 yen. Yamaha Motor Co. (7272), a motorcycle maker that gets almost 90 percent of sales outside Japan, advanced 4.4 percent to 1,398 yen. A declining yen boosts overseas earnings at Japanese firms when repatriated.

Cars Recalled

Toyota, Honda Motor Co. and Nissan Motor Co. recalled at least 3 million vehicles worldwide for defects in airbags made by Takata Corp. Shares of Takata slumped 9 percent to 1,819 yen.

Securities companies rose for a 10th day, posting the largest gains on Japan’s broader Topix Index. Nomura Holdings Inc., the nation’s biggest brokerage, increased 8.3 percent to 760 yen. Daiwa Securities Group Inc. (8601), the No. 2, climbed 4.9 percent to 807 yen.

Sharp soared 7.9 percent to 313 yen. The company will report operating profit for the period October to March of about 20 billion yen ($201 million), exceeding its 13.8 billion yen forecast, the Nikkei reported without citing anyone.

Futures on the Standard & Poor’s 500 Index (SPX) were little changed. The measure yesterday climbed 1.2 percent, to a record, as a report showed China’s imports grew, Japan reiterated its stimulus plans and investors speculated earnings will beat estimates.

Fed Minutes

Several Federal Reserve officials said the U.S. central bank should taper its bond-buying program later this year and stop it by the end of 2013 if labor-market conditions improve, according to minutes of its March meeting released yesterday. Fed Chairman Ben S. Bernanke said on April 8 that economic conditions were far from where he would like them to be.

Taiwan’s Taiex Index advanced 1.4 percent, led by Taiwan Semiconductor Manufacturing Co. (2330) The world’s largest contract producer of chips surged 3.3 percent to NT$101.50, the most in more than four months, as first-quarter sales of NT$132.8 billion ($4.4 billion) exceeded analysts’ estimate of NT$129.1 billion. The company projects that sales will rise at a percentage in the teens this year, Chief Executive Officer Morris Chang said on April 9 in San Jose, California.

GS Engineering fell 15 percent to 42,000 won after the South Korean builder reported a 386.1 billion won ($342 million) loss for the first quarter.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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


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