Asian Stocks Rise as Raw-Material Shares, Nikkei Advance

By Adam Haigh

Asian stocks rose as inflation in China eased more than forecast, buoying commodity producers. Japan’s Nikkei 225 Stock Average (NKY) climbed to a 4 1/2 year high amid speculation Bank of Japan stimulus will boost earnings.

BHP Billiton Ltd. (BHP), the biggest mining company, gained for a third day in Sydney as metal prices rose. Canon Inc., a camera maker that gets 80 percent of sales outside Japan, rose 1.9 percent. Sundance Resources Ltd. (SDL) tumbled 48 percent after terminating an agreement with Sichuan Hanlong Group following the Chinese company’s failure to secure funding for its A$1.14 billion ($1.18 billion) bid to buy the rest of the Australian iron-ore miner. The MSCI Asia Pacific Index (MXAP) gained 0.3 percent to 134.40 as of 1:20 p.m. in Tokyo, rising for a second day. About four stocks advanced for each that three fell on the gauge. The regional benchmark increased the last five months as Japanese shares rose on speculation the nation will deploy more stimulus and amid signs the U.S. economy is recovering.

“Risk appetite is still there for equities,” Binay Chandgothia, Hong Kong-based fund manager at Principal Global Investors, which oversees more than $280 billion, said in a telephone interview. “On an incremental basis, it’s safe to put money into Japan as a lot of people haven’t yet got on to the bandwagon. I’m not too worried about China -- they won’t tighten policy meaningfully.” He maintains an overweight position on Asian equities.

Japan’s Nikkei 225 Stock Average added 0.1 percent, taking its gain since the close on April 2, before the BOJ started a two-day meeting that resulted in additional stimulus, to 10 percent.Australia’s S&P/ASX 200 Index gained 1.1 percent andSingapore’s Straits Times Index rose 0.6 percent. Taiwan’s Taiex Index slid 0.4 percent and New Zealand’s NZX 50 Index slipped 0.1 percent.

China CPI

Hong Kong’s Hang Seng Index rose 0.9 percent and China’s Shanghai Composite Index added 0.4 percent as inflation in the world’s second-largest economy eased more than forecast from a 10-month high, reducing pressure on policy makers to tighten credit as the country recovers from a slowdown.

The consumer price index rose 2.1 percent in March from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.5 percent median estimate in a Bloomberg News survey of 38 economists and a 3.2 percent gain in February when spending for the Lunar New Year holiday pushed up prices.

Miners Rise

BHP Billiton rose 1.4 percent to A$33.13, heading for the longest streak of gains in two months.Rio Tinto Group (RIO), the world’s second-largest mining company, advanced 2.9 percent to A$56.45 in Sydney. Komatsu Ltd., the world’s second-biggest construction equipment maker, added 2.7 percent to 2,356 yen in Tokyo. Jiangxi Copper Co., China’s largest producer of the metal, advanced 2.8 percent to HK$16.76 in Hong Kong. Copper climbed 0.6 percent, gaining for a second day.

Japanese exporters rose as the yen traded at 99.29 per dollar. Nissan Motor Co., a carmaker, gained 0.5 percent to 984 yen and Canon rose 1.9 percent to 3,470 yen.

Securities firms advanced in Tokyo amid optimism central- bank stimulus will boost investor demand for equities. Nomura Holdings Inc., Japan’s biggest brokerage, climbed 0.8 percent to 668 yen, advancing for a sixth day in the longest rising streak in two months. Okasan Securities Group Inc. advanced 1.3 percent to 1,018 yen, headed for the highest close since 2006.

BOJ Stimulus

BOJ officials said on April 4 the central bank will increase its monthly bond purchases to 7.5 trillion yen ($76 billion), exceeding the 5.2 trillion yen forecast by economists surveyed by Bloomberg. They also suspended a cap on some bond holdings and dropped a limit on debt maturities, while also setting a two-year horizon for their goal of 2 percent inflation.

“Keep piling in” to Japanese shares, Timothy Condon, head of Asia research at ING Investment Management, who helps oversee $241 billion in Singapore, told Bloomberg TV. “You’ll earn handsome returns from investing in the Japanese stock market. This is one of the best examples of monetary policy out of the Bank of Japan (8301) and is certainly unprecedented in the 20 years I’ve been watching. It’s going to work.”

Futures on the Standard & Poor’s 500 Index rose 0.1 percent. The measure gained 0.6 percent yesterday as investors speculated first-quarter earnings for U.S. companies would help equities rebound from their biggest weekly decline of the year.

The MSCI Asia Pacific Index traded at 13.6 times average estimated earnings yesterday compared with 14.1 for the Standard & Poor’s 500 Index and 12.3 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

North Korea

Rising military tensions with North Korea have driven the cost of protecting against swings in a security tracking South Korean stocks to the highest level on record compared with emerging-market equities. Implied volatility, the key gauge of option prices, for contracts closest to the iShares MSCI South Korea Capped Index Fund jumped 26 percent this month to 23.3, according to data compiled by Bloomberg. That’s a record 41 percent more than the measure for the iShares MSCI Emerging Markets Index.

South Korea’s Kospi index dropped 0.4 percent. Shinwon Corp. led declines among companies that do business in North Korea after the communist nation said it will suspend operations at a jointly run industrial complex. Shinwon fell 4.7 percent to 1,225 won.

Sundance fell a record 48 percent to 11 Australian cents. Hanlong’s botched bid for Sundance brings the value of China’s recent failed mining deals to $45 billion, a record that’s prompted stricter Chinese scrutiny of acquisitions.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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