Asia Stocks Gain After China Reforms as Oil Falls With Bond Risk

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Asian stocks rose for a third day and regional credit risk declined after China vowed to carry out the broadest expansion of economic freedoms since at least the 1990s. The won and ringgit strengthened for a third day, while oil and metals retreated.

The MSCI Asia Pacific Index added 0.8 percent at 12:40 p.m. in Tokyo. A measure of Chinese shares listed in Hong Kong headed for the highest close since May. Standard & Poor’s 500 Index futures slid 0.1 percent after the gauge rose to a record. The cost of insuring corporate and sovereign bonds in Asia from non- payment was poised for the lowest since Oct. 31. The won and ringgit each gained 0.2 percent. Oil lost 0.3 percent as silver and copper fell at least 0.2 percent.

Chinese leaders pledged to allow more private investment in state-controlled industries, loosen the nation’s one-child policy and expand farmers’ land rights, as data today showed new home prices rose in 69 of 70 cities in October. New York Federal Reserve Bank President William C. Dudley is scheduled to appear today, after Janet Yellen, the nominee for chairman, said last week she wants to maintain the central bank’s record stimulus program until the U.S. economy improves.

“The initial reaction to the Chinese communication was a negative one but as we’re getting more detail, it looks like this is a revolutionary change,” Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $131 billion, told Bloomberg Television. “We’re starting to get optimism coming through the market. The turnaround in sentiment and the improving macro data should push the equity market higher into 2014.”

 

China Reforms

 

Hong Kong’s Hang Seng Index jumped 2 percent after the measure rallied 1.7 percent on Nov. 15, the most since Oct. 30. The Hong Kong China Enterprises Index surged 3.9 percent while the Shanghai Composite Index advanced 1.4 percent and the CSI 300 Index gained 1.5 percent.

Policy makers in China post the Communist Party plenum signaled a bigger focus on fiscal concerns, with local governments to be allowed to sell debt and officials to be rated on measures including borrowing levels. Extra land rights for farmers also featured in the reform package.

The Topix climbed 0.3 percent, set for an almost six-month high, while South Korea’s Kospi gained 0.4 percent, rising for a third day. Australia’s S&P/ASX 200 Index dropped 0.2 percent as local banks retreated.

Thailand’s SET Index gained 0.4 percent even after data showed the economy grew less than analysts estimated last quarter on weaker exports and lower consumption and investment. Indonesia’s Jakarta Composite Index climbed 1.3 percent, while shares in Taiwan, Vietnam and the Philippines also increased.

 

Credit Risk

 

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 132 basis points as of 8:23 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show.

Boston Fed President Eric Rosengren is scheduled to speak in Abu Dhabi today. Other Fed speakers today include Charles Plosser and Narayan Kocherlakota. Yellen, currently Fed vice chairman, said during her confirmation hearing before the Senate Banking Committee last week that it’s important policy makers don’t cut support for the U.S. economy too soon given the limited range of tools available to the central bank, which has to promote a “very strong recovery.”

The Federal Open Market Committee probably will wait to taper its bond buying to $70 billion at its March 18-19 meeting, from the current pace of $85 billion a month, according to the median estimate of 32 economists in a Nov. 8 Bloomberg survey.

 

Won, Ringgit

 

The won climbed 0.2 percent to 1,061.65 per dollar, set for its strongest close since Nov. 7. The Bank of Korea reported a 1.4 percent drop in producer prices in October from a year earlier, the 13th straight month of declines, a report today showed.

The ringgit gained 0.2 percent to 3.1954 against the greenback, climbing for a third day. Data last week showed Malaysia’s economy grew 5 percent last quarter year-on-year, exceeding all but three estimates in a Bloomberg poll.

The Bloomberg’s U.S. Dollar Index, which monitors the greenback against 10 major counterparts, was little changed at 1,016.21 after capping the biggest weekly drop in a month. The yen traded at 100.17 per dollar after touching 100.44 last week, the weakest since Sept. 11, and was at 135.16 per euro from 135.21 at the end of last week.

 

Oil, Gas

 

The S&P GSCI index of commodities traded at 616.40 from 616.92 on Nov. 15, when the gauge capped a 1.1 percent weekly gain, the the first such increase in a month. Natural gas rose for a third day on forecasts weather in the U.S. will be colder than usual, boosting demand for heating. Futures in New York increased 0.6 percent after surging 2.8 percent last week.

West Texas Intermediate crude retreated to $93.60 a barrel as Saudi Arabia, the world’s largest crude producer, exported the most oil in eight years. WTI dropped 0.8 percent last week, its sixth weekly decline and the longest stretch of weekly losses since 1998.

Palladium lost 0.4 percent to $730.25 an ounce after reaching a one-month low of $722.55 on Nov. 15. Platinum decreased 0.1 percent in a second day of declines. Silver slipped 0.3 percent to $20.7380 an ounce, and gold dropped 0.2 percent to snap three days of gains.

Copper for delivery in three months fell for the first time in three days, losing 0.2 percent to $6,998.00 a metric ton, as spending on China’s power plants and electricity grid slowed. Zinc, nickel and tin also declined.

 

 

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