Asian stocks headed for the first weekly gain in a month after Federal Reserve chairman nominee Janet Yellen said she would continue U.S. stimulus and amid speculation China will Asian stocks headed for the first weekly gain in a month after Federal Reserve chairman release detail of economic reform.
Japan’s Nikkei 225 Stock Average (NKY) surged beyond 15,000 for the first time since May, rising 1.9 percent and on course for its biggest weekly gain since December 2009. China’s CSI 300 Index jumped 2.9 percent, heading for its biggest increase in two months, amid optimism detail of policy changes decided at a Communist Party plenum will be released next week.
The MSCI Asia Pacific Index added 1.3 percent to 141.53 as of 12:47 p.m. in Hong Kong, extending this week’s advance to 1.8 percent. The gauge is set to snap three weeks of declines, the longest set of such losses since June. All 10 industry groups on the measure rose. Today’s surge in Chinese stocks reversed a slump on Nov. 13 when a lack of details from the leaders’ plenum disappointed investors.
“The pendulum has swung to the positive side after the disappointment with the plenum and that’s coming with all the good news about the Fed stimulus outlook,” Adrian Zuercher, a global strategist at Credit Suisse (Hong Kong) Ltd., part of the asset-management unit of Credit Suisse Group AG that oversees the equivalent of $404 billion. “Any policy changes are going to be in the right direction and improve market stability.”
Morgan Stanley said yesterday it expects China to outline economic reforms in the next seven to 10 days and that investors’ earlier concerns had been misplaced.
Japan’s broader Topix (TPX) index gained 1.7 percent. The Nikkei 225 jumped 1.9 percent, climbing above 15,000 for the first time since May 24. South Korea’s Kospi index rose 1.9 percent, while Australia’s S&P/ASX 200 Index advanced 0.8 percent. New Zealand’s NZX 50 Index fell 0.3 percent and Singapore’s Straits Times Index increased 0.3 percent.
The Asia-Pacific gauge traded at 13.6 times estimated earnings as of yesterday, compared with 16.2 for the Standard & Poor’s 500 Index and 15 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the S&P 500 added 0.2 percent today. The measure gained 0.5 percent to a record yesterday. Asked yesterday about stock prices, Yellen said she doesn’t see “bubble-like conditions.”
“Stock prices have risen pretty robustly, but if you look at traditional measures” such as price-earnings ratios, “you would not see stock prices in territory that suggests bubble-like conditions,” she told the Senate Banking Committee in Washington.
The S&P 500 has rallied more than 25 percent this year, putting it on pace for the best annual gain in a decade. The gauge has rebounded 165 percent from a 12-year low in March 2009, adding more than $10 trillion in market value.
“I consider it imperative that we do what we can to promote a very strong recovery,” Yellen said in response to a question during her testimony. “It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero.”
Yellen “provided a staunch defense about the use of asset-purchase programs and stated that U.S. Fed policy would remain in place while the U.S. economy remains fragile,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion, said in an e-mail. “This wasn’t just music to the ears of stimulus hungry investors, it was like listening to Beethoven’s Ninth Symphony.”
Hong Kong’s Hang Seng Index rose 1.5 percent and the Hang Seng China Enterprises Index of mainland stocks traded in the city gained 2.8 percent. China’s Shanghai Composite Index advanced 2.3 percent and the CSI 300 Index rose 2.9 percent. Taiwan’s Taiex Index added 0.8 percent.
Investors’ expectations that the Chinese government would release details of discussions soon after the end of the plenum were “misplaced” as reforms will be announced over the next seven to 10 days, Jonathan Garner, Hong Kong-based chief Asia and emerging-market strategist at Morgan Stanley, said in an interview from Singapore yesterday.
Japanese exporters climbed as the yen lost 0.2 percent to 100.20 per dollar, extending the biggest weekly drop among 16 major currencies and boosting the earnings outlook for companies generating sales overseas. Toyota Motor Co. (7201) added 1.1 percent to 6,380 yen. Honda Motor Co. gained 0.9 percent to 4,090 yen, extending its weekly advance to 5.7 percent.
Dai-ichi Life Insurance Co. surged 7.3 percent to 1,552 yen in Tokyo after the insurer raised its full-year net income forecast by 54 percent to 57 billion yen ($569 million).
Luk Fook Holdings (International) Ltd. climbed 6.4 percent to HK$29.25, heading for the highest closing level in Hong Kong since January, after the jeweler said increased sales in gold products will boost profit.
Dwango Co. surged 21 percent to 2,264 yen and Nintendo Co. rallied 5.1 percent to 13,060 yen in Tokyo after the creator of the game franchises Mario and Zelda bought a stake in Dwango, a company that provides content through mobile phones.