By Darren Boey and Chua Kong Ho, Bloomberg
Hong Kong: Asian stocks climbed after the US Federal Reserve abandoned its bias toward an increase in interest rates. The dollar traded near a two-year low against the euro. Japanese government bonds rose.
The Nikkei average climbed 1.49% to end at its highest close in three weeks on Thursday, as Canon Inc. and other blue-chips gained on chances that the Federal Reserve may cut interest rates to support the world’s largest economy, a key market for Japanese goods.
The Nikkei rose 256.00 points to 17,419.20, the highest close since 1 March. The broad TOPIX index rose 1.38% to 1,731.80.
“Asia’s growth is still geared toward trade with the US,” said Peter Chiang, who helps oversee about $8 billion (Rs34,933 crore) as chief investment strategist at DBS Asset Management in Singapore. “The Fed’s comments give it more leeway to ease interest rates and provide relief to a market that’s worried about a fallout from a slowing US economy.”
Cnooc Ltd rose as crude-oil prices gained for a third day, while a rise in gold prices helped lift Newcrest Mining Ltd. Nippon Steel Corp. pushed Japanese makers of the alloy higher after a government report showed steel exports increased.
The Morgan Stanley Capital International Asia-Pacific Index gained 1.7% to 145.81 at 4:28 pm in Tokyo. It’s set for the highest close since 27 February, the day a plunge in Chinese stocks triggered a global rout that erased $3.3 trillion of market value. All of the benchmark’s 10 industry groups rose.
The Hang Seng Index added 173.84, or 0.9%, to 19,690.25, its highest close since 27 February. The Hang Seng China Enterprises Index, which tracks the so-called H shares of 41 mainland companies, climbed 1.1% to 9,413.70.
Cheung Kong, the city’s second-largest developer by market value, added HK$2.30, or 2.4%, to HK$96.85, its highest since 27 February. Sun Hung Kai Properties Ltd, the No. 1 developer, climbed HK$1.80, or 2%, to HK$90.25, its highest since 2 March. Hang Lung Properties Ltd, the third biggest, gained 55 cents, or 2.5%, to HK$22.20, its highest since 26 February.
HSBC, which controls two of the city’s largest lenders, climbed HK$2.30, or 1.7 percent, to HK$136.50. Bank of East Asia Ltd, a Hong Kong-based lender, added 30 cents, or 0.7%, to HK$44.30.
The Singapore Straits Times Index gained 63.82, or 2%, to 3219.51, its highest close since 27 February. Four stocks climbed for each one that declined.
Chartered, the world’s No. 3 maker of custom chips, gained 3 cents, or 2.1%, to S$1.46. Venture Corp., which makes electronics for customers including Hewlett-Packard Co., added 40 cents, or 2.7%, to S$15.
Singapore ships about a fifth of its exports to the US, its single-largest export market.
CapitaLand, Singapore’s biggest property developer climbed 25 cents, or 3.3%, to S$7.75. Its luxury apartments in the city’s Orchard Road shopping belt fetched record prices, the company said in a statement.
City Developments Ltd, the second-biggest real-estate company, jumped 80 cents, or 5.9%, to S$14.30. Keppel Land Ltd, the No. 3 developer, rose 25 cents, or 2.8%, to S$9.20. The company said it has received “strong interest” from more than 1,000 potential buyers for units in a waterfront condominium project overlooking the resort island of Sentosa.
Among the index’s biggest stocks, DBS, Singapore’s largest bank, gained 50 cents, or 2.3%, to S$22.10. United Overseas Bank Ltd, the second biggest, climbed 60 cents, or 2.9%, to S$21.20. Oversea-Chinese Banking Corp., the smallest of the three local lenders, rose 5 cents, or 0.6%, to S$8.80.
The Kospi index climbed 5.68, or 0.4%, closing at 1,448.53 in Seoul, the highest since 27 February. The Kosdaq gained 0.3% to 645.77. Kospi 200 futures expiring in June added 0.9% to 188.60, while the underlying index advanced 0.5% to 187.15.
Samsung Electronics, which accounted for about 16% of South Korean exports last year, rose 3,000 won, or 0.5%, to 582,000. Samsung SDI Co., the world’s third largest maker of plasma displays, advanced 200 won, or 0.3%, to 60,300.
Hynix Semiconductor Inc., the world’s second-largest computer- memory maker, added 850 won, or 2.7%, to 32,750. Separately, Hyundai Securities Co. raised its six-month price estimate by 8.1% to 40,000 won, in a report today. The company’s cross- licensing agreements with Toshiba Corp. and SanDisk Corp. are a “major long-term positive factor,” wrote Jay Kim, an analyst.
Shinhan, South Korea’s second-largest lender, gained 1,100 won, or 2%, to 57,100. Hana Financial Group Inc., the fourth biggest, climbed 350 won, or 0.7%, to 49,350.
About 295 million shares valued at 3.4 trillion won changed hands on the Korea stock exchange, 18% more than the three-month daily average of 2.9 trillion won.
The dollar traded near a two-year low against the euro after the Fed unexpectedly abandoned its bias toward higher interest rates and the European Central Bank signaled it may raise borrowing costs.
The US dollar today weakened against 10 of the 15 most- active Asia-Pacific currencies. It dropped to a decade-low versus the currency of Australia, where the central bank may lift rates as soon as next month.
“The dollar looks vulnerable,” said Chris Loong, head of currency and asset allocation at State Street Global Advisors in Sydney. “The Fed is very close to cutting. This will weigh against the dollar and underpin high-yielding currencies such as the Australian and New Zealand dollars.”
The US currency traded at $1.3373 per euro as of 7:28 am in London from $1.3385 yesterday in New York and reached $1.3411, the weakest since March 2005. It fell as low as 80.88 cents per Australian dollar, the weakest since December 1996.
Japanese 10-year bonds rose for a fourth day, pushing down yields to the lowest in more than a year, after central banks of the world’s two largest economies kept interest rates unchanged to assess the outlook for inflation.
Ten-year debt completed the longest rally since November after the Fed left the benchmark US interest rate at 5.25% yesterday and unexpectedly softened a reference on the need for higher rates. Bank of Japan (BOJ) Governor Toshihiko Fukui said today borrowing costs will stay low, after the bank two days ago kept its key overnight rate unchanged.
“The BOJ won’t keep raising rates when the Fed is easing,” said Akio Kato, a fund manager in Tokyo at Kokusai Asset Management Co., which runs the world’s second-largest bond mutual fund. “There is a concern consumer prices will drop and the economy will peak out in Japan. Bonds are likely to be strong.”
The yield on the 1.7% bond due March 2017 slid 1.5 basis points to 1.545% as of 4:30 pm in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. It was the lowest since 23 February 2006. A basis point is 0.01 percentage point. The price rose 0.131 yen to 101.340 yen.
— With reporting by Kosuke Goto and Issei Morita in Tokyo and Chris Young in Sydney