Asian stocks posted a second weekly gain, with the regional benchmark index rising to its highest level since May, as US lawmakers looked closer to a deal to avert the so-called “fiscal cliff” and the frontrunner to be Japan’s next prime minister repeated calls for stimulus.
The MSCI Asia Pacific Index climbed 1.4 percent to 124.65 this week, extending last month’s gain to 2.2 percent. The gauge rose more than 14 percent from this year’s low on June 4, as central banks from Europe, the US, Japan and China took steps to support economic growth.
“Market expectations are that the US cutbacks will be watered down and spread over several years,” said Matthew Sherwood, head of markets research at Perpetual Investment. “If the cliff is successfully flattened out over several years, the US recession feared by markets is unlikely to occur.”
Stocks on Asia’s benchmark index were valued at about 14.1 times estimated earnings on average on Friday, compared with about 13.6 for the Standard & Poor’s 500 Index and 12.5 for the STOXX Europe 600 Index, according to data compiled by Bloomberg.
Taipei led the advancers in the region, chalking up a gain of 3.5 percent this week to end at 7,580.17, its highest since Oct. 9, when the index closed at 7,592.01. With foreign funds flowing in, tech stocks’ strong showing helped keep the momentum up throughout the week. Market bellwether Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) closed the week 3.4 percent higher at NT$98.70,
South Korea’s KOSPI gained 1.1 percent. Singapore’s Straits Times Index added 2.8 percent. Hong Kong’s Hang Seng Index rose 0.5 percent and the Hang Seng China Enterprises Index of mainland companies rose 0.2 percent.
Japan’s Nikkei 225 Stock Average rose 0.9 percent, its third weekly advance. Japan’s Cabinet on Friday approved a ￥880 billion (US$10.7 billion) stimulus package to boost the economy before a general election on Dec. 16. The Nikkei has climbed 9 percent since Nov. 14, when elections were called that polls suggest would be won by an opposition part calling for more aggressive monetary easing.
“If the Bank of Japan is forced to become even looser, the yen will be potentially even weaker, and that’s relatively good news for exports,” Andrew Freris, chief investment adviser for Asia at BNP Paribas Wealth Management, told Bloomberg Television on Friday.
In the US, Republican House Speaker John Boehner said he was optimistic that budget talks could avert more than US$600 billion in automatic tax increases and spending cuts next year. The Congressional Budget Office has said a failure to avoid the fiscal cliff could lead to a recession.
In other markets on Friday:
Wellington rose 0.83 percent, or 33.32 points, from Thursday to 4,050.09
Mumbai was up 0.88 percent, or 168.99 points, to 19,339.90 points.
Manila was closed for a public holiday.