Asian stocks rose, with the benchmark regional index climbing to a four-month high, after the Federal Reserve unexpectedly refrained from cutting US economic stimulus.
The MSCI Asia Pacific Index climbed 1.9 per cent to 141.32 as of 11.17am in Hong Kong as all 10 industry groups on the gauge advanced, on course for the largest gain in two months. Markets in mainland China, South Korea, Taiwan and Sri Lanka are closed for holidays.
The Federal Open Market Committee said that it wants to see more more evidence that improvement in the US economy will be sustained before adjusting the pace of its US$85 billion in monthly purchases of Treasury and mortgage debt. Analysts had predicted a US$5 billion reduction, according to estimates compiled by Bloomberg. While there is no fixed schedule, tapering could begin later this year should the data confirm the Fed’s "basic outlook," Chairman Ben S. Bernanke said.
"It’s taper off, risk on," Keith Poore, head of investment strategy at AMP Capital Investors Ltd in Wellington, which manages about US$130 billion, said by telephone. "Ultimately it will be supportive for markets. You want to hold on to your risk positions if you have them at the moment. We take it as a positive, as it’s definitely dovish."
Japan’s Topix index rose 1.2 per cent, heading for the highest closing level in two months, as a report showed the nation’s exports jumped 14.7 per cent in August from a year earlier, the most since 2010. Australia’s S&P/ASX 200 Index gained one per cent to a five-year high. New Zealand’s NZX 50 Index climbed one per cent to a record high. Hong Kong’s Hang Seng Index added 1.7 per cent and Singapore’s Straits Times Index surged 1.8 per cent.
Standard & Poor’s 500 Index futures added 0.1 per cent after the gauge climbed to a record in New York yesterday.
Raw-material producers posted the largest gains among the 10 industry groups on the Asia Pacific index. BHP Billiton Ltd, the world’s largest mining company, rose 1.8 per cent to A$36.755, Rio Tinto Group, the second-biggest, advanced three per cent to A$63.56 and Newcrest Mining Ltd jumped 7.8 per cent to A$12.915 in Sydney.
Sumitomo Metal Mining Co surged 8.2 per cent to 1,460 yen in Tokyo and Zhaojin Mining Industry Co, China’s No. 2 gold producer, jumped 8.3 per cent to HK$7.16 in Hong Kong as gold increased after the Fed’s decision.
Speculation over the future of the Fed’s quantitative-easing programme has whipsawed global assets since May, when Bernanke first signaled cuts may start in 2013. The Asia-Pacific index climbed to a four-month high this week after former Treasury Secretary Lawrence Summers withdrew his bid to be the next Fed chairman.
The Asia-Pacific index’s 7.3 per cent rally in 2013 though yesterday has lagged a 21 per cent surge in the S&P 500 Index amid concern economic growth in China is slowing. The Asia- Pacific measure traded yesterday at 13.5 times estimated earnings, compared with a multiple of 15.6 for the S&P 500 and 14.3 times for the Stoxx Europe 600 Index, data compiled by Bloomberg show.
Japan’s Topix index climbed 39 per cent this year through yesterday, the most among developed markets, amid optimism Prime Minister Shinzo Abe and the Bank of Japan can lead the country out of deflation through unprecedented monetary easing. About 13 trillion yen (US$131 billion) was added to the market capitalization of the Topix last week after the city’s winning bid for the 2020 Olympic Games was announced, data compiled by Bloomberg show.
North Asian stocks will rise faster this year than the rest of the region as a strengthening global economy boosts exports, according to Haren Shah, Singapore-based chief strategist for Asia-Pacific at Citigroup Inc’s wealth management division, which oversees US$210 billion. The firm is recommending investors buy technology and industrial companies from China, South Korea and Taiwan.
Billabong International Ltd, an Australian surfwear company that said its namesake brand is worthless, accepted a refinancing plan from Oaktree Capital Management LP and Centerbridge Partners LP, walking away from a rival deal. The shares, which have fallen 42 per cent this year, gained 6.1 per cent to 47.75 Australian cents.
Emerging markets across the region surged the most after yesterday’s Fed decision. Indonesia’s Jakarta Composite Index soared 4.5 per cent and Thailand’s SET Index rose 2.9 per cent. The FTSE Bursa Malaysia KLCI Index advanced 1.1 per cent.-- Bloomberg