Most Asian Stocks Climb as BOJ Meets, China Adds Funds to Banks

Jan 21, 2014 6:39 am ET

Jan. 21 (Bloomberg) -- Most Asian stocks rose as the Bank of Japan started a two-day policy meeting and China’s money- market rates dropped after the central bank pumped funds into the financial system.

Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, climbed 2.7 percent in Hong Kong. LG Display Co., a supplier of panels for Apple Inc. devices, rose 2.3 percent in Seoul after Bank of America Corp.’s Merrill Lynch raised its rating on the stock. Fortescue Metals Group Ltd., Australia’s third-largest iron-ore miner, sank 4.6 percent in Sydney after a benchmark for the metal’s price fell in China, the biggest consumer of the commodity.

The MSCI Asia Pacific Index was little changed at 139.21 as of 8:36 p.m. in Tokyo, with about three stocks rising for every two that declined. The gauge fell yesterday after data showed China’s economic growth slowed last quarter. The People’s Bank of China supplied money to the largest commercial banks through a lending facility yesterday as rising demand for cash before the Lunar New Year drove the biggest jump in money-market rates in seven months.

China’s actions “will reduce the credit-crunch fears and assure funding continues to follow into the Chinese economy,” Evan Lucas, a Melbourne-based market strategist at IG Ltd., said in an e-mail. “This is further proof that the central bank is monitoring the situation daily and is unlikely to let the money markets get too far out of hand.”

Chinese Banking

Small- and medium-sized Chinese banks will also be able to tap the PBOC’s Standing Lending Facility for loans of up to two weeks on a trial basis after the seven-day repurchase rate, a gauge of interbank funding availability, jumped 153 basis points yesterday to 6.32 percent. The week-long Lunar New Year holiday starts Jan. 31 and is a period in which cash gifts are made and families get together for celebratory feasts.

China’s Shanghai Composite Index rose 0.9 percent. The nation’s seven-day reverse repurchase rate dropped to as low as 5.16 percent today. The People’s Bank of China conducted 180 billion yuan of 21-day reverse repos at a yield of 4.7 percent today, it said on its website. A further 75 billion yuan was injected using seven-day reverse repos at a yield of 4.1 percent, the same rate as when the agreements were last auctioned on Dec. 24.

The Hang Seng China Enterprises of Index of mainland companies traded in Hong Kong advanced 1.8 percent, while the city’s benchmark Hang Seng Index added 0.5 percent.

Japan’s Topix index gained 0.2 percent as the BOJ began its meeting to review monetary policy. South Korea’s Kospi index added 0.5 percent. Australia’s S&P/ASX 200 Index climbed 0.7 percent. New Zealand’s NZX 50 Index increased 0.6 percent. Singapore’s Straits Times Index added 0.2 percent. Taiwan’s Taiex index lost 0.3 percent.

Thai Protests

Thailand’s SET Index fell 0.1 percent after rising 1.1 percent earlier. The nation’s army chief called for calm after attacks on anti-government rallies in Bangkok injured 70 people, prompting authorities to consider declaring a state of emergency for the first time since 2010.

The Asia-Pacific benchmark gauge trades at 13.1 times estimated earnings, compared with 15.6 for the Standard & Poor’s 500 Index and 14.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 rose 0.3 percent today. U.S. equity markets will resume trading today after yesterday’s public holiday.

Chinese lenders advanced in Hong Kong. ICBC climbed 2.7 percent to HK$4.91. China Construction Bank Corp., the nation’s second-biggest lender, increased 3 percent to HK$5.55. Agricultural Bank of China of Ltd. rose 2.1 percent to HK$3.46.

Lenovo Group Ltd. jumped 2.8 percent to HK$10.46, as the world’s largest maker of personal computers is said to be in discussions to acquire International Business Machines Corp.’s low-end server business.

Metals, Oil

LG Display, the world’s second-largest flat panel maker, gained 2.3 percent to 26,900 won after Bank of America’s Merrill Lynch unit raised its rating on the stock to buy from underperform.

Iron-ore producers declined after the metals’ futures for May delivery at the Dalian Commodity Exchange in China headed for the lowest since October. Fortescue, which gets about 98 percent of revenue from China, sank 4.6 percent to A$5.41 in Sydney. Atlas Iron Ltd. fell 4.1 percent to 94 Australian cents.

Cnooc Ltd., China’s biggest offshore oil and gas producer, slipped 6.3 percent to HK$13.08, its biggest decline since October 2011. Credit Suisse Group AG and Sanford Bernstein lowered their ratings on the stock after Cnooc forecast output growth that fell short of target.

--Editors: Tom Redmond, Sarah McDonald