(Corrects headline to show Japan-led rebound.)
Asian shares rebounded from two weekly declines after the Federal Reserve decided to start scaling back record stimulus. Japan’s Nikkei 225 (NKY) Stock Average rose to its highest since 2007 as the Fed’s move sent the yen to a five-year low.
Alacer Gold Corp., Australia’s third-largest listed producer of the precious metal, lost 2.5 percent as tapering cut demand for haven assets. A gauge tracking Chinese shares traded in Hong Kong fell the most since October on concern higher funding costs will hurt growth after money-market rates surged. Fanuc Corp. (6954), a Japanese maker of factory robotics, rose to a record.
The MSCI Asia Pacific Index gained 0.5 percent to 138.67, while the MSCI Emerging Markets Index dropped 0.2 percent. The Standard & Poor’s 500 Index reached a record after the Ben S. Bernanke-led Fed announced it was cutting monthly asset purchases to $75 billion from $85 billion starting January, with a stronger commitment to keep its benchmark interest rate near zero.
“There are obviously positives and negatives for Asian markets and emerging markets,” said Peter Elston, Singapore-based head of Asia-Pacific strategy at Aberdeen Asset Management, which oversees about $324.6 billion. “The negatives are clearly that emerging markets and Asian markets have been big beneficiaries of quantitative easing. The positives are if Bernanke is talking about the strength in the U.S. economy, then it should be good for emerging economies.”
Japan’s Nikkei 225 gained 3 percent this week, closing at its highest since Dec. 12, 2007. The broader Topix (TPX) index added 1.8 percent. The yen fell 0.8 percent to the dollar, its eighth weekly drop and the lowest since October 2008. The Bank of Japan yesterday decided to maintain record easing.
“There’s such a strong correlation between the Japanese yen and the stock market,” Aberdeen’s Elston said.
Fanuc soared 11 percent to 18,800 yen. Fast Retailing Co., Asia’s biggest apparel chain and the heaviest-weighted company on the Nikkei 225, jumped 9.8 percent to 41,850 yen. Honda Motor Co., a carmaker that gets 47 percent of its revenue from North America, added 3 percent to 4,300 yen.
South Korea’s Kospi Index added 1 percent. New Zealand’s NZX 50 Index dropped 0.8 percent, while Australia’s S&P/ASX 200 Index gained 3.3 percent, its biggest weekly gain in almost eight months. Singapore’s Straits Times Index rose 0.9 percent. Taiwan’s Taiex Index added 0.4 percent. The S&P BSE Sensex (SENSEX) added 1.8 percent as the Reserve Bank of India kept the main repurchase rate at 7.75 percent even as wholesale inflation reached a 14-month high in November.
The Hang Seng China Enterprises Index, also known as the H-share index, fell 3.6 percent in its biggest weekly decline since the period ended Oct. 25. Targeted cash injections by the central bank failed to alleviate surging money-market rates. China’s interest-rate swaps on Dec. 19 touched a record. Hong Kong’s Hang Seng Index lost 1.9 percent, while China’s Shanghai Composite Index dropped 5 percent.
The Federal Open Market Committee said it will slow buying “in further measured steps at future meetings” if the economy improves as forecast. The central bank will taper its bond buying by about $10 billion per gathering, Bernanke said. The Fed chief’s term ends Jan. 31, with Vice Chairman Janet Yellen awaiting Senate confirmation to succeed him.
Gold producers fell as bullion for immediate delivery on Dec. 19 slid to the lowest settlement since Aug. 3, 2010, as tapering cut demand for haven assets. Alacer lost 2.5 percent to A$2.30. Persus Mining Ltd. plunged 10 percent to 22 Australian cents.
Among other stocks that fell, Daewoo Engineering & Construction Co. lost 9.2 percent to 6,980 won in Seoul after a South Korean regulator began inspecting the company’s accounting practices.
The MSCI Asia-Pacific gauge ended the week trading at 13.8 times estimated earnings, compared with multiples of 16.4 for the S&P 500 and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
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