Bloomberg News

Asian Stocks Rise a Second Day Ahead of Fed Stimulus Decision

December 18, 2013

Securities Firm in Tokyo

A pedestrian holding an umbrella waits to cross a road in front of an electronic stock board outside a securities firm in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Asian stocks rose for a second day, led by an advance in Japanese equities, as the declining yen boosted exporters and investors await a Federal Reserve decision on its stimulus program.

Honda Motor Co. (BHP), which gets 80 percent of its sales abroad, gained 3.1 percent as the yen weakened against the dollar. Casio Computer Co. (6952) climbed 5.7 percent in Tokyo after Morgan Stanley advised buying the shares. Wotif.com Holdings Ltd. slumped 32 percent after the Australian online travel company said it will report lower profit.

The MSCI Asia Pacific Index added 0.7 percent to 138.52 as of 6:34 p.m. in Hong Kong. The measure fell the past two weeks as improving U.S. economic data spurred bets stimulus will be pared. There’s about a 60 percent chance Fed Chairman Ben S. Bernanke and his colleagues will announce a cut in their bond buying today, according to Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., which oversees $1.97 trillion as the world’s largest manager of bond funds.

“If they don’t taper in this meeting they will give a strong indication of a taper in the January or March meeting,” Chris Weston, Melbourne-based chief market strategist at IG Ltd., said in an e-mail. “A failure to move shouldn’t cause too much of a reaction in the markets, as long as the chairman gives a strong indication it is coming. Much will be made of the tone of Ben Bernanke and how upbeat he sounds on the future of the economy.”

Regional Gauges

The Fed will start paring $85 billion of monthly bond purchases when it concludes its two-day policy meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, with the rest expecting reductions next year.

Japan’s Topix index rose 1.5 percent and the Nikkei 225 Stock Average climbed 2 percent as the yen declined 0.3 percent to 102.93 per dollar. Honda gained 3.1 percent to 4,215 yen, and Toyota Motor Corp. added 1.6 percent to 6,200 yen.

Australia’s S&P/ASX 200 Index slid 0.1 percent, while New Zealand’s NZX 50 Index slipped 1.1 percent. South Korea’s Kospi index rose 0.5 percent. Singapore’s Straits Times Index lost 0.2 percent, and Taiwan’s Taiex Index fell 0.1 percent.

Hong Kong’s Hang Seng Index (HSI) advanced 0.3 percent, while the Hang Seng China Enterprises Index rose 0.6 percent. China’s Shanghai Composite Index slid 0.1 percent after the nation’s statistics bureau reported new home prices rose in November in 69 of 70 cities.

India’s S&P BSE Sensex climbed 1.2 percent after the central bank unexpectedly left its key rate unchanged even as it faces Asia’s fastest consumer-price inflation, signaling concern for economic growth.

Relative Value

The MSCI Asia Pacific Index gained 7.1 percent so far this year as central-bank stimulus shored up global economic growth. The Asia-Pacific gauge traded at 13.7 times estimated earnings, compared with 16.05 for the Standard & Poor’s 500 Index and 14.82 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The Topix rose 45 percent this year, the most among 24 major developed markets tracked by Bloomberg, amid unprecedented stimulus by the Bank of Japan in support of Prime Minister Shinzo Abe’s efforts to end 15 years of deflation.

Futures on the S&P 500 Index gained 0.4 percent today after the equity gauge fell 0.3 percent yesterday.

Fed policy makers have scrutinized data and U.S. budget negotiations to determine whether economic growth is robust enough to withstand withdrawal of monetary support. The House last week passed a budget that limits automatic spending cuts and avoids another government shutdown.

Casio gained 5.7 percent to 1,235 yen in Tokyo as Morgan Stanley MUFG Securities Co. upgraded its recommendation on the shares to overweight.

Hutchison Spinoff

Hutchison Whampoa Ltd., a diversified company controlled by Li Ka-shing, gained 3.3 percent to HK$103.60 after a person with knowledge of the matter said its retail arm would be valued at more than $20 billion in an initial public offering.

Wotif.com tumbled 32 percent to A$2.85 in Sydney. The online travel firm said it expects net income after tax of A$21.9 million-A$22.6 million for the first half of the year, down from A$27.5 million a year earlier.

Kunlun Energy Co. (135), the gas distribution arm of China National Petroleum Corp., retreated 3 percent to HK$13.76 in Hong Kong after its chairman resigned amid a widening government anti-corruption campaign that claimed his predecessor four months earlier.

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

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net


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