Asian Stocks Advance After China’s New Lending Climbs to Record

Feb 17, 2014 5:55 am ET

Feb. 17 (Bloomberg) -- Asian stocks rose for a second day after China’s new credit increased to a record in January, boosting optimism the world’s second-largest economy can maintain growth momentum.

China Life Insurance Co., the nation’s biggest company in the sector, jumped 5.8 percent after UBS AG and Credit Suisse Group AG raised their ratings on the stock. Newcrest Mining Ltd., Australia’s biggest gold producer, advanced 3.6 percent as bullion prices rose. Rakuten Inc., an Internet retailer controlled by billionaire Hiroshi Mikitani, dropped 9.5 percent in Tokyo after announcing plans buy the Viber online messaging and calling service for $900 million.

The MSCI Asia Pacific Index added 0.7 percent to 136.29 at 7:40 p.m. in Tokyo as five shares rose for every two that fell. The equity benchmark climbed 1.6 percent last week as trade data from China beat estimates and Janet Yellen’s first testimony to Congress as head of the Federal Reserve buoyed optimism about the U.S. economy.

“There’s optimism in the market,” Desmond Chua, an analyst at CMC Markets in Singapore, said by phone. “Record credit growth in China should offset recent concerns the economy is slowing down. Investors are looking forward to additional monetary stimulus in Japan as the government tries to counter the negative effect of the higher consumption tax in April.”

South Korea’s Kospi index increased 0.3 percent. Australia’s S&P/ASX 200 Index gained 0.5 percent. Taiwan’s Taiex index and New Zealand’s NZX 50 Index both added 0.1 percent. Singapore’s Straits Times Index climbed 1 percent. Hong Kong’s Hang Seng Index advanced 1.1 percent, while China’s Shanghai Composite Index rose 0.9 percent.

China Lending

Chinese aggregate financing, the broadest measure of credit in the world’s second-biggest economy, was 2.58 trillion yuan ($430 billion) last month, the People’s Bank of China said in a Feb. 15 statement. The data, while suggesting China can limit the scale of a slowdown, contrast with a central bank call last month for lenders to control surging loans and highlight diminishing economic returns from credit growth.

Japan’s Topix index added 0.7 percent after falling as much as 1 percent earlier. The economy grew less than forecast in the fourth quarter, according to a report today, underscoring risks to the recovery as a sales-tax increase looms in April.

Gross domestic product expanded an annualized 1.0 percent from the previous quarter, the Cabinet Office said in Tokyo, compared with the 2.8 percent median estimate of economists surveyed by Bloomberg News.

Cautious Outlook

“At this stage we remain cautious,” Angus Gluskie, who helps oversee about $550 million as a fund manager at White Funds Management in Sydney, said by phone. “The rally that we’ve seen in the past week has been very rapid and that could sometimes be problematic. We’d like to see a bit more data.”

The Standard & Poor’s 500 Index gained 0.5 percent on Feb. 14 as earnings overshadowed weaker-than-estimated U.S. jobs and factory data last week. The U.S. market is closed today for a public holiday.

The Fed’s Yellen said last week that U.S. growth has strengthened and that only a “notable change in the outlook” for the economy would prompt policy makers to slow the pace of cuts to the central bank’s monthly bond-buying program.

The MSCI Asia Pacific Index has pared losses after dropping 4.6 percent in January, its worst start since 2009, amid concern about Fed stimulus cuts, signs of a slowdown in China and volatility in developing markets. Global equity losses in 2014 peaked at $3 trillion on Feb. 4 and narrowed to about $145 billion as of yesterday, data compiled by Bloomberg show.

Earnings Season

Of the 360 companies on the Asian measure that have reported quarterly earnings since the beginning of January and for which estimates are available, 54 percent beat profit expectations, Bloomberg-compiled data show.

China Life jumped 5.8 percent to HK$22.85 in Hong Kong, its biggest advance since Nov. 18. Credit Suisse raised its rating to outperform from neutral, while UBS increased its recommendation to buy from neutral.

Gold producers climbed after the prices for the precious metal climbed as much as 0.9 percent today. Newcrest Mining advanced 3.6 percent to A$11.45. Zhaojin Mining Industry Co., China’s second-largest gold producer, gained 2 percent to HK$5.54 in Hong Kong.

South Korean construction companies gained. Expectations housing prices will continue to increase will benefit the industry, Tongyang Securities wrote in a note today.

Hyundai Engineering & Construction Co., the nation’s biggest builder by market value, gained 2.8 percent to 58,000 won in Seoul. GS Engineering & Construction Corp. surged 11 percent to 33,700 won, its biggest advance since October 2011.

Rakuten sank 9.5 percent to 1,499 yen in Tokyo. CLSA Asia- Pacific Markets cut its rating to underperform from buy after the company announced the Viber acquisition.

“Direct monetization of the Viber business is likely to take a long time,” CLSA analyst Oliver Matthew wrote in a note.

--Editors: Tom Redmond, Jim Powell