Asian stocks rose, with the regional benchmark gauge posting its largest weekly gain this month, amid speculation China and the US will do more to boost growth in the world’s two largest economies.
The MSCI Asia Pacific Index gained 1.2 percent to 116.66, its largest weekly advance in three weeks. Concern that growth in China’s economy would slow as Europe’s debt crisis deepens has dragged down the regional benchmark gauge 9.4 percent from this year’s peak in February.
“China is the only country where they have more power to stimulate the economy,” Pu Yonghao (浦永灝), Hong Kong-based regional chief investment officer for the Asia-Pacific at UBS Wealth Management, said in a Bloomberg TV interview.
The Swiss bank oversees about US$1.5 trillion in assets.
“We are betting that in the second half of the year they should be able to turn the economy around. On a long-term valuation basis, we expect some kind of 10 percent upside by year-end” for Asian equities, without specifying any particular benchmark.
The MSCI Asia Pacific trades at 11.8 times estimated earnings, compared with a multiple of 13.3 for the Standard & Poor’s 500 Index and 11 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average slid 0.6 percent this week and the broader TOPIX lost 1.7 percent. Of the 1,671 companies on the TOPIX, 209 companies are scheduled to report earnings next week, according to data compiled by Bloomberg News.
South Korea’s KOSPI increased 0.6 percent. Australia’s S&P/ASX 200 Index climbed 2.9 percent, its biggest weekly gain of the year and close to its highest in two months.
Hong Kong’s Hang Seng Index gained 2.9 percent, while China’s Shanghai Composite Index slid 0.8 percent.
Shares also rose on easing prospects as swap market indicators suggested China will cut banks’ reserve requirements and encourage corporate lending as the cabinet meets to discuss efforts to revive economic growth.
China has “relatively large” room to boost fiscal spending to support economic growth, Zhang Peng, a Beijing-based researcher at the Ministry of Finance, said on Wednesday in a telephone interview.
The TAIEX rose 0.2 percent on Friday to 7,164.68, capping a 0.9 percent gain this week.
On Friday, the local bourse moved in a narrow range amid lingering concerns over global demand, although the index closed in positive territory, dealers said.
A warning from Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest contract chip maker, about possible inventory adjustments has made the market more wary of corporate earnings outlook, they said.
The reduced turnover indicated many investors preferred to stay on the sidelines, watching anxiously how companies in Taiwan and Wall Street will report their second quarter results and give guidance for the third quarter in the coming week, they added.
The market opened down 0.17 percent on a lackluster performance on Wall Street overnight and continued ranged trade throughout the trading session as worries over the world’s economic fundamentals kept weighing on investors sentiment, dealers said.
“Look at the low turnover. The local bourse appeared very quiet with many investors on the sidelines,” Grand Cathay Securities (大華證券) analyst Mars Hsu (徐振家) said. “They simply did not want to trade at the moment.”
“The warning issued by TSMC, the market heavyweight, has raised concerns over demand and local high-tech exporters’ bottom lines,” Hsu said.
In other markets on Friday:
Wellington fell 0.63 percent, or 22.07 points, from Thursday to 3,463.70.
Manila closed 0.41 percent higher, adding 21.52 points from Thursday to 5,210.89.
Mumbai fell 0.70 percent, or 120.41 points, from Thursday to 17,158.44.
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