Tuesday, 19 November 2013

Asian Stocks Hold Gains After Biggest Rally Since July

By Yoshiaki Nohara & Kana Nishizawa - Nov 19, 2013 2:54 AM PT

Asian stocks rose after the region’s benchmark index yesterday completed its steepest three-day rally since July on optimism China’s economic reforms will boost growth.
China Life Insurance Co., the nation’s biggest insurer, rose 4.8 percent in Hong Kong after Citigroup Inc. named the company as one of the beneficiaries of Communist Party policy measures. Samsung Electronics Co. gained 1 percent as foreigners bought a net 246 billion won ($233 million) of stocks in South Korea’s benchmark Kospi index. Honda Motor Co., which gets 83 percent of its revenue outside Japan, lost 1.1 percent as the yen gained for a second day.
Tokyo Stock Exchange A visitor looks at an electronic board displaying stock figures at the Tokyo Stock Exchange (TSE) in Tokyo. Photographer: Kiyoshi Ota/Bloomberg
Nov. 18 (Bloomberg) -- Adrian Mowat, the Hong Kong-based chief Asia and emerging-market strategist at JPMorgan Chase & Co., talks about the region's markets and his investment strategy. He speaks with Angie Lau and Rishaad Salamat on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
The MSCI Asia Pacific Index added less than 0.1 percent to 143.05 as of 6:47 p.m. in Hong Kong after earlier falling as much as 0.2 percent. About five shares fell for every four that climbed on the gauge. The measure jumped 3.2 percent in the three trading days through yesterday as China pledged to execute economic reforms and Federal Reserve chairman nominee Janet Yellen said she would continue U.S. stimulus.
“There’s some profit-taking pressure,” said Kenny Tang, Hong Kong-based general manager of AMTD Financial Planning Ltd. “But sentiment has improved a lot.”
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong added 0.5 percent, paring an earlier gain of as much as 2.1 percent. Hong Kong’s Hang Seng Index closed little changed, while China’s Shanghai Composite Index slipped 0.2 percent.

Reform Agenda

China policy makers unveiled the biggest package of economic reforms since the 1990s last week, with leaders in the world’s second-largest economy pledging to allow more private investment in state-run industries, ease the one-child policy and expand farmers’ land rights.
China Life surged 4.8 percent to HK$24.20, capping its biggest two-day gain since December 2008. Ping An Insurance (Group) Co., China’s second-largest insurer, added 0.6 percent to HK$69.90. The stocks were listed as some of the reform winners by Citigroup and jumped yesterday amid optimism the changes will promote development of the sector and market-based pricing.
“The market is still optimistic about the detailed reform plan”, said Teresa Chow, a fund manager at RBC Investment (Asia) Ltd., which oversees $1.5 billion. “Since Hong Kong and China markets are underweighted by many fund managers, some of them might want to increase their weighting.”

Regional Gauges

South Korea’s Kospi added 1 percent, with Samsung Electronics rising 1 percent 1.489 million won. Taiwan’s Taiex Index rose 0.8 percent.
Japan’s Topix (TPX) index declined 0.4 percent, its first drop in four days, after the yen gained 0.2 percent to 99.81 per dollar. Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index both lost 0.6 percent. Singapore’s Straits Times Index fell 0.3 percent.
Energy companies climbed the most on the Hang Seng Composite Index. China Petroleum & Chemical Corp. rose 1.2 percent to HK$6.99. Kunlun Energy Co., a gas supplier, increased 2.1 percent to HK$13.64. PetroChina Co., the nation’s biggest oil and gas producer, advanced 2.5 percent to HK$9.49.
Oil and energy companies will benefit most from reforms, Erwin Sanft, the head of China and Hong Kong equity research at Standard Chartered Plc, said in an interview yesterday. The document made clear statements about moving back to market-driven policies, Sanft said.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today after the measure dropped 0.4 percent from a record yesterday. U.S. stocks have risen for the past six weeks as Yellen signaled she will continue stimulus efforts. New York Federal Reserve Bank President William C. Dudley yesterday said he’s “getting more hopeful” the U.S. economy is gaining strength as the drag from fiscal policy wanes. The central bank’s monetary policy is likely to be accommodative for a long time, he said.

‘Bull-Market Environment’

The Federal Open Market Committee won’t taper its purchases until its March 18-19 meeting, according to the median estimate of 32 economists surveyed by Bloomberg News Nov. 8.
“The direction is up for everybody,” said Mikio Kumada, a Hong Kong-based global strategist for LGT Capital Partners. “We are in a positive bull-market environment. The global economy is growing, Asia has been underperforming for many years and valuations are not expensive.”
The Asia-Pacific gauge traded at 14 times estimated earnings, compared with 16.2 for the S&P 500 and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japanese exporters declined as the yen rose a second day. Honda, Japan’s second-biggest car manufacturer by market value, fell 1.1 percent to 4,095 yen. Bridgestone Corp., Asia’s No. 1 tiremaker, dropped 0.7 percent to 3,675 yen. Sharp Corp., a television maker that gets about 60 percent of sales outside Japan, slipped 1.8 percent to 278 yen.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net
To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net