HONG KONG: Asian stocks rose, with the benchmark index heading for a second monthly gain, and the Australian dollar strengthened. The ringgit climbed to a four- month high after Malaysia unveiled its 2014 budget.
The MSCI Asia Pacific Index advanced 0.7 percent at 11:28 a.m. in Tokyo. Standard & Poor’s 500 Index futures added 0.4 percent after the gauge climbed to a record. Australia’s S&P/ASX 200 Index rose 1.2 percent to the highest level since June 2008 as the nation’s currency gained 0.3 per cent versus the greenback. The ringgit strengthened 0.7 per cent.
The Federal Reserve will maintain record stimulus at a two-day policy meeting that begins tomorrow, according to a Bloomberg poll. The U.S. will report industrial output today, after an Oct. 25 report showed consumer sentiment in the world’s biggest economy fell to a 10-month low. Consumer confidence in South Korea rose this month to the highest since May 2012, according to a central bank survey.
“We are in a liquidity-fueled stock boom,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about US$25 billion, said in an e-mail. “Rising valuations have never stopped overheating markets, so the market rise could be extended, as long as central bank stimulus remains in place.”
More than two stocks advanced for every one that fell on MSCI’s Asian benchmark index, with technology and health-care companies leading gains. Japan’s Topix added 0.8 percent, while Hong Kong’s Hang Seng Index rose 0.4 per cent and the Shanghai Composite Index was little changed.
Zoomlion Heavy Industry Science & Technology Co. jumped 6.3 percent in Hong Kong after a Chinese newspaper apologized for publishing stories questioning the company’s finances. Chong Hing Bank Ltd. tumbled 6.4 per cent in the city after the Hong Kong lender accepted a US$1.5 billion takeover bid from Yue Xiu Group.
Komatsu Ltd. and China Telecom Corp. are among Asian companies scheduled to report earnings today, while Apple Inc. is also due to announce results. Of 99 companies in MSCI’s Asian index that have provided quarterly results this earnings season and for which Bloomberg compiles estimates, 54 posted profit that fell short of forecasts and 56 missed sales projections.
The MSCI Asia Pacific Index has climbed 2.7 per cent this month, pushing its price-earnings multiple to 12.7 times estimated profit, according to data compiled by Bloomberg. That compares with 14.8 times for the S&P 500 and 13.4 times for the Stoxx Europe 600 Index.
The Kospi index gained 0.2 per cent as foreign investors boosted their holdings of Korean stocks for a record 42nd day, lured by a widening current-account surplus, strengthening currency and the fastest economic growth in almost two years. Samsung Securities Co. predicted inflows will accelerate, while BlackRock Inc., the world’s largest money manager, has been buying on expectations profit growth will quicken.
Chinese brokerages are betting the biggest jump in money-market rates since June’s record cash crunch is a sign of strength in the nation’s economy rather than finance-industry weakness. The central bank has refrained from injecting funds into the banking system since Oct. 17, driving the benchmark seven-day repurchase rate 138 basis points higher to 4.88 per cent last week, the biggest increase in four months.
The one-year swap contract, the fixed payment needed to lock in the repo rate for 12 months, rose three basis points today to 4.10 per cent. That compares with a 5.06 per cent peak in June, when investors were concerned overstretched banks would default on payments.
The Federal Open Market Committee starts a two-day meeting tomorrow after U.S payrolls rose less than projected last month and a 16-day government shutdown took at least US$24 billion out of the economy. The Fed is likely to delay lowering monthly bond purchases until March, according to a Bloomberg News survey of economists conducted Oct. 17-18.
Australia’s dollar rose to 96.09 U.S. cents from 95.84 following a 1 per cent slide last week that marked the biggest decline since August. The ringgit advanced as much as 1.1 per cent to 3.1355 per dollar, the strongest since June 17, after Malaysia announced plans for a consumption tax and scrapped sugar subsidies to trim its budget deficit. -- BLOOMBERG