Bloomberg News

Asian Shares Cap Weekly Gain on China Stimulus Bets; Topix Drops

May 16, 2014

Asian stocks gained this week, with the regional benchmark posting its biggest advance in six weeks, amid optimism China will add to stimulus measures and as investors weighed earnings.

China Overseas Land & Investment Ltd., the biggest mainland developer listed in Hong Kong, jumped 6.7 percent. Power Finance Corp., which funds utilities, surged 28 percent in Mumbai as investors speculated Narendra Modi’s Bharatiya Janata Party, which was voted into power yesterday, will revive economic growth. Tencent Holdings Ltd., Asia’s largest Internet company, surged 11 percent in Hong Kong after its profit soared. Sony Corp. plunged 6.7 percent as the Japanese electronics maker forecast a surprise loss.

The MSCI Asia Pacific Index gained 1.3 percent to 139.72 this week, its steepest rally since the period ended April 4. A measure of global equities touched a 6 1/2-year high May 13 as U.S. stock gauges rose to records. China’s central bank told lenders to accelerate the granting of mortgages, spurring optimism that policy makers will do more to counter a slowdown in Asia’s biggest economy.

“We’re certainly seeing government reforms continue to gain momentum,”said Daphne Roth, the Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $207 billion. “GDP growth might have to slow. But there are expectations that some of the softer macroeconomic data out of China will prompt some stimulus.”

Hong Kong’s Hang Seng Index (HSI) surged 3.9 percent this week, its biggest such gain since September. The Hang Seng China Enterprises Index, also known as the H-share gauge, added 2.8 percent. The Shanghai Composite Index climbed 0.8 percent.

Home Loans

The People’s Bank of China told the nation’s 15 biggest lenders on May 13 to accelerate the granting of mortgages, giving priority to first-time buyers while monitoring credit risks, according to a statement on its website.

Premier Li Keqiang is seeking to put a floor under the economic slowdown, with developers holding off on new construction as sales stall and the surplus of empty units swells. Home sales fell 18 percent in April from the previous month, according to data from the National Bureau of Statistics.

The central bank’s order to speed home loans isn’t enough to turn around the property market and more loosening measures may be announced, with a cut in banks’ reserve-requirement ratios expected in the second quarter, Nomura Holdings Inc. wrote in a report.

China Overseas Land jumped 6.7 percent to HK$19.24. China Resources Land Ltd., the second-biggest mainland developer listed in Hong Kong by market value, advanced 7 percent to $HK1. Building-materials supplier Anhui Conch Cement Co. gained 3.4 percent to $HK28.50.

Indian Election

The S&P BSE Sensex (SENSEX) soared 4.9 percent in Mumbai this week to a record 24121.74. Modi’s BJP swept to power with the biggest Indian election win in 30 years as voters tired of sluggish economic growth and corruption handed a historic defeat to the Gandhi dynasty that has dominated politics since the country’s founding. The value of Indian equities has climbed by more than $330 billion since the BJP named Modi as its candidate for prime minister on Sept. 13.

Power Finance surged 28 percent to a three-year high 257.75 rupees. Rural Electrification Corp., which finances power projects, soared 16 percent to 290.20 rupees.

Japan’s Topix index slid 0.6 percent this week as the yen gained 0.35 percent to 101.51 per dollar. The equity measure slumped 11 percent this year, the most among developed markets tracked by Bloomberg.

Sony Loss

More than 650 Topix members reported results this week. Sony, which forecast an annual loss for the sixth time in seven years, dropped 6.7 percent this week to 1,646 yen. The loss will probably be 50 billion yen ($493 million) in the 12 months ending March 31, the Tokyo-based electronics maker said. That compared with the 57.1 billion-yen profit projected by analysts surveyed by Bloomberg.

Samsung Electronics Co. contributed the most to the regional equity index’s advance this week, rising 7 percent to 1.4 million won in Seoul. Tencent was the second-biggest boost, surging 11 percent to HK$106.50.

The Internet company, which had a stock split take effect on May 15, reported this week that net income jumped to 6.46 billion yuan ($1.04 billion) in the three months ended March, beating the 4.86 billion-yuan average of nine analysts’ estimates compiled by Bloomberg.

The MSCI Asia Pacific Index traded yesterday at 12.8 times estimated earnings, compared with 15.9 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. Among companies on the Asian gauge that reported results since April 1 and for which Bloomberg had estimates, 50.2 percent beat projections for profit.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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


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