Asian Stocks Rise to Three-Week High as BOJ Boosts Loan Programs

Feb 18, 2014 3:57 am ET

Feb. 18 (Bloomberg) -- Asian stocks rose, with the regional benchmark index poised for a three-week high, after the Bank of Japan maintained unprecedented asset purchases and boosted lending programs. Chinese shares fell as the central bank drained liquidity from the financial system.

Toyota Motor Corp., the world’s largest carmaker, climbed 2.6 percent in Tokyo as the yen slid. BHP Billiton Ltd., the world’s biggest mining company, rose 2.3 percent in Sydney after first-half profit jumped more than expected. China Minsheng Banking Corp. fell 1.1 percent in Hong Kong, pacing declines among mainland lenders.

The MSCI Asia Pacific Index added 0.9 percent to 137.55 as of 4:33 p.m. in Hong Kong, heading for its highest close since Jan. 24. Global equities erased this year’s losses after Janet Yellen’s first testimony to Congress as head of the Federal Reserve and China’s record lending buoyed optimism in the world’s largest economies.

“The broad market uptrend remains intact,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital, which manages $131 billion. “Japan is in a unique situation as the BOJ continues to add stimulus, while the Fed is beginning to taper. Liquidity tightening in China shouldn’t be a concern as policy makers need to mop up excess liquidity. There’s enough credit available in China to support growth.”

Japan’s Topix index jumped 2.7 percent, the most since Sept. 3, as the yen slumped. The nation’s central bank pledged to maintain plans to expand the monetary base by 60 trillion yen ($585 billion) to 70 trillion yen per year, as forecast by all 34 economists surveyed by Bloomberg News. It doubled a funding facility to 7 trillion yen and said individual banks could borrow twice as much low-interest money as previously under a second lending facility.

Australia Rates

Australia’s S&P/ASX 200 Index gained 0.2 percent. A period of steady interest rates is likely as record-low borrowing costs and a weaker currency aid growth, the nation’s central bank said in minutes released today of its Feb. 4 meeting, where it kept the benchmark rate unchanged at 2.5 percent. Policy makers will monitor prices after a surprising acceleration in inflation last quarter, it said.

Taiwan’s Taiex index added 0.4 percent. India’s S&P BSE Sensex index climbed 0.8 percent. New Zealand’s NZX 50 Index, South Korea’s Kospi index and Singapore’s Straits Times Index were little changed. Hong Kong’s Hang Seng Index gained 0.2 percent, after falling as much as 0.4 percent.

China Liquidity

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 0.4 percent. China’s Shanghai Composite Index fell 0.8 percent, retreating from a two-month high. The nation’s money-market rates climbed as the central bank drained funds from the banking system after new lending reached a record.

“The central bank has realized there’s a need to soak up some liquidity,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “The process will pressure stocks.”

China’s foreign direct investment climbed 16.1 percent to $10.76 billion in January from a year earlier, according to a government report released today. That compares with the 2.5 percent median growth forecast by analysts in a Bloomberg survey and a 3.3 percent rise in December.

The MSCI Asia Pacific Index rebounded this month after dropping 4.6 percent in January, its worst start since 2009. Global stocks erased their losses for the year as growing confidence in the U.S. economy and a rally in emerging markets restored $3 trillion of value. The MSCI All-Country World Index advanced for a ninth straight day yesterday, lifting the value of world equities to $62.1 trillion from this year’s low of about $59 trillion on Feb. 4, data compiled by Bloomberg show.

Relative Value

Shares on the MSCI Asia Pacific Index traded at 12.8 times estimated earnings yesterday, compared with 14.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index traded at a multiple of 15.6 at the end of last week, the data showed. U.S. markets were closed yesterday for a holiday.

Of the 362 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.

Japanese exporters advanced as the yen slid and touched the weakest level this month against the dollar. Toyota climbed 2.6 percent to 5,945 yen. Nissan Motor Co., a carmaker that gets about 80 percent of sales outside of Japan, rose 2.1 percent to 938 yen. Canon Inc., the world’s biggest camera maker, increased 2.4 percent to 3,079 yen.

BHP, Biosensors

BHP Billiton gained 2.3 percent to A$38.89 in Sydney, the highest close in a year. Underlying profit rose 31 percent to $7.8 billion in the six months through Dec. 31 from a year earlier, the Melbourne-based company said today in a statement. That beat a median forecast of $6.9 billion of seven analysts surveyed by Bloomberg.

Biosensors International Group Ltd. surged 14 percent to S$0.995. Citic Private Equity Funds Management Co., a unit of China’s state-backed Citic Group Corp. conglomerate, is considering buying full control of the Singapore-listed medical devices maker, said two people with knowledge of the deliberations. Trading in the stock was suspended in the late afternoon.

Among stocks that fell, Coca-Cola Amatil Ltd. dropped 5.3 percent to A$11.22 in Sydney, the lowest since August 2011, as Australia’s biggest beverage maker apologized to investors after a A$404 million ($367 million) writeoff at its packaged-foods unit SPC Ardmona drove profit to its lowest level since 1992.

Chinese lenders declined. China Minsheng, the nation’s first non-state lender, dropped 1.1 percent to HK$7.90 in Hong Kong. China Construction Bank Corp., the country’s second- largest lender, slipped 0.9 percent to HK$5.43.

--With assistance from Zhang Shidong in Shanghai and Emma O’Brien in Wellington. Editors: Tom Redmond, Jim Powell