Sun, Aug 19, 2012 - Page 15 News List

Asian markets surge on Wen’s hint of flexibility

PURSUING GROWTH:Comments by the Chinese premier fueled speculation Beijing would cut banks’ reserve ratios or interest rates to achieve targets


Asian stocks rose this week, with the benchmark index posting its longest weekly winning streak since March, after Chinese Premier Wen Jiabao (溫家寶) said there was more room to adjust monetary policy and US economic reports signaled strength in the world’s largest economy.

The MSCI Asia Pacific Index rose for a third straight week, gaining 0.2 percent to 120.74 in its longest winning streak since the five days ended March 2. As of Friday, the Asia-Pacific benchmark has retreated more than 6 percent from a Feb. 29 high amid concern China’s economy is slowing and Europe’s debt crisis is deepening.

“The global central banks’ attitude to prevent economies from falling into a serious slowdown is helping investor sentiment,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co in Tokyo. “Data that would signal a rebound in the US economy and steady personal spending is positive.”

Stocks on the index, which includes companies from emerging countries, were valued at about 12.6 times estimated earnings on average, compared with about 13.7 times for the Standard & Poor’s 500 Index and 11.7 times for the STOXX Europe 600 Index, according to data compiled by Bloomberg.

Japan’s Nikkei 225 Stock Average gained 3.1 percent this week, even after the nation’s economic growth slowed in the three months through June and missed analysts’ estimates. Shares moved higher after Bank of Japan’s last meeting showed policymakers weren’t ruling out any options to boost growth.

Taiwan’s TAIEX slid 0.3 percent on Friday, but managed a 0.4 percent gain this week to 7,467.92. Without a strong showing of the high-tech sector, the market is expected to remain in consolidation mode, Mirae Asset Management analyst Arch Shih (施博元) said on Friday.

“It seemed that worries over the world’s economic fundamentals continued to weigh on market sentiment, preventing investors from chasing prices,” Shih said. “I expect stiff technical resistance ahead of 7,500 points, which will affect the market’s performance in the next few sessions.”

Hong Kong’s Hang Seng Index slid 0.1 percent, while China’s Shanghai Composite Index fell 2.5 percent. South Korea’s KOSPI was little changed in a week that was shortened by a holiday.

Australia’s S&P/ASX 200 Index gained 2.2 percent even after a survey showed consumer confidence fell the most in five months.

Singapore’s Straits Times Index added 0.3 percent after its exports last month rose more than economists estimated as companies shipped more electronics and petrochemicals.

China’s state radio reported Wen as saying there was growing room for monetary policy operation.

“We have the conditions and capabilities, and will be sure to fulfill this year’s economic and social development targets,” Wen said during a two-day inspection tour of Zhejiang Province, Xinhua news agency reported on Wednesday.

The comments may bolster speculation China will cut banks’ reserve requirements or benchmark interest rates again after inflation slowed to a 30-month low last month, export growth collapsed and new yuan loans trailed estimates. A report on Thursday showed foreign direct investment in China last month fell to the lowest level in two years.

In the US, retail sales climbed more than forecast last month, as consumer spending rebounded at department stores, auto dealers and electronics outlets. A separate report showed US builders took out more residential construction permits last month than at any time in the past four years, a sign the market would continue to improve.

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