Asian stocks climbed, driving the region’s key benchmark index to its first advance in eight weeks, as concern Europe’s debt crisis will hurt earnings of exporters and banks eased and the US Federal Reserve said it is prepared to provide further stimulus to the US economy if needed.
“The high oil price was a massive constraint on a fragile recovery, so anything that takes the froth off the energy market is positive for growth,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd, which has almost US$100 billion under management. “With Greece, they’ve managed to kick the can further down the road, but any progress in avoiding contagion to the rest of Europe is going to be welcomed.”
The MSCI Asia Pacific Index rose 2 percent to 132.24 this week, snapping its longest series of weekly losses since 2004, as EU leaders pledged to stabilize the eurozone economy and stave off a Greek default as long as the country’s parliament passes a package of budget cuts.
The seven-week slump amid speculation Greece will default on its debt payments and signs the US economic recovery is faltering exceeded a six-week streak of declines in the aftermath of the September 2008 collapse of Lehman Brothers Holdings Inc.
Japan’s Nikkei 225 Stock Average gained 3.5 percent over the week. South Korea’s KOSPI advanced 2.9 percent. Hong Kong’s Hang Seng Index increased 2.2 percent, while China’s Shanghai Composite Index climbed 3.9 percent.
“The news out of Greece is good for a bounce in markets, particularly as they are very oversold,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd, which manages about US$98 billion in Sydney. “There is still a lot of water to go under the bridge before Greece gets a new bailout package and uncertainty still remains about the strength of the global economic recovery. It could remain a volatile ride for a while yet.”
The MSCI Asia-Pacific index lost 6.1 percent since the peak last month, dragging valuations of stocks in the benchmark index to 13.2 times estimated earnings on Monday, the lowest since April 20, according to data compiled by Bloomberg.
Taiwanese share prices came under pressure amid lingering concerns over global demand on Friday, with high-tech heavyweights, semiconductor stocks in -particular, leading the way in the retreat, dealers said.
Petrochemical stocks extended their losses from the previous session on the plunge in international crude oil prices, they said.
The weighted index closed down 34.45 points, or 0.40 percent, at 8,532.83, after moving between 8,508.16 and 8,569.59, on turnover of NT$91.73 billion (US$3.17 billion). The TAIEX lost 1.2 percent this week.
In other markets on Friday:
Manila surged 1.66 percent, or 70.30 points, from Thursday to 4,291.44.
Wellington fell 0.18 percent, or 6.14 points, from Thursday to 3,455.66.
Mumbai jumped 2.89 percent, or 513.19 points, from Thursday to 18,240.68.