Asian stocks rose this week, with the benchmark index capping its eighth gain in nine weeks, as economic reports in the world’s two largest economies beat estimates and a weaker yen boosted Japan’s exporters.
Sony Corp surged 17 percent this week in Tokyo after announcing the sale of its New York headquarters for US$1.1 billion. Li & Fung Ltd (利豐), a supplier to Wal-Mart Stores Inc, dropped 14 percent in Hong Kong after saying operating income slumped 40 percent last year.
The MSCI Asia Pacific Index rose 0.7 percent to 132.72 this week after last week snapping a seven-week winning streak.
The regional gauge is extending its two-month rally amid signs US and Chinese economies are recovering and amid surge in Japanese stocks on speculation that Japanese Prime Minister Shinzo Abe will pursue aggressive stimulus policies.
Stocks on Asia’s benchmark index were valued at 14.3 times estimated earnings on average, compared with about 13.4 times for the Standard & Poor’s 500 Index and 12.1 times for the STOXX Europe 600 Index, data compiled by Bloomberg show.
South Korea’s KOSPI slid 0.4 percent, while Taiwan’s TAIEX fell 1.1 percent to 7,732.87 on Friday, compared with 7,819.15 on Jan. 11.
With equity markets awash in liquidity, share prices on Taiwan’s main board are unlikely to suffer a major pullback in the short term, analysts said yesterday.
The benchmark weighted index ended up 1.52 percent on Friday, helped by an infusion of funds from foreign institutional investors, who bought a net NT$3.43 billion (US$118 million) in local shares.
Wu Yin-liang, a fund manager at Taishin Securities Investment Trust (台新投信), said liquidity-driven buying could push share prices higher and even challenge the 8,000-point level this year.
In addition to strong liquidity, traders said the TAIEX should also benefit from a recovery in the global economy, in particular the faster pace of growth in China.
China’s economy grew 7.9 percent in the fourth quarter, up from 7.4 percent in the third quarter.
Japan’s Nikkei 225 Stock Average gained 1 percent this week, while the broader TOPIX capped its longest weekly winning streak since 1986 as the yen fell to a two-and-a-half year low against the US dollar. A weaker yen boosts overseas income at Japanese companies when converted.
Hong Kong’s Hang Seng Index gained 1.5 percent this week, as China’s Shanghai Composite Index gained 3.3 percent after data showed the economy grew more than estimated in the fourth quarter.
Shares also climbed after China’s securities regulator said the nation can increase by 10 times the size of two investment programs that allow foreign investors to buy securities.
In other markets on Friday:
Mumbai
rose 0.38 percent, or 75.01 points, from Thursday to 20,039.04.
Wellington fell 0.78 percent, or 32.63 points, to 4,164.18.
Manila closed 1.10 percent higher, adding 67.03 points to end at 6,139.21.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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