Asian shares rose this week, with the regional benchmark posting its biggest increase since April, amid signs the Japanese and US economies are improving. Stocks in Hong Kong rebounded on optimism the recent rout amid concerns of a Chinese cash crunch was overdone.
The MSCI Asia Pacific Index rose 2.2 percent this week, its biggest such increase since the week through April 26, when the measure rose almost 3 percent. The MSCI Asia Pacific Index has retreated 9.6 percent from the closing level on May 20, which was the highest since June 2008.
“More growth means equities have a very good fundamental reason to continue rallying as we look through the noise,” Michael Kurtz, Hong Kong-based head of global equity strategy at Nomura Holdings, said on Bloomberg Television.
“China stocks are starting to look substantially undervalued. Investors with a medium to long-term perspective should be taking this as an opportunity to go shopping,” he said.
The MSCI Asia Pacific Index began trading lower earlier in the week on concerns the US Federal Reserve would taper monetary easing and as China’s money markets endured their worst cash crunch in at least a decade. The measure ended the month down 3.2 percent, its second month of losses and capping its first quarterly slump in a year.
Shares advanced through the week’s second half after Japanese reports showed the economy strengthened last month, amid assurances the Fed would not soon end stimulus efforts and China’s central bank saying it has provided liquidity to financial institutions to steady money-market rates.
The S&P 500 Index rose 0.9 percent in New York this week. Consumer spending in the US rebounded last month, household purchases and incomes advanced,US Department of Commerce figures showed on Thursday. Consumer sentiment held close to a six-year high this month, as rising home values gave Americans more reason to be optimistic about the economy.
Asia’s benchmark trades at 12.7 times average estimated earnings, compared with multiples of 14.6 for the S&P 500 and 12.7 for the Europe STOXX 600 Index, according to data compiled by Bloomberg.
Taiwan’s TAIEX advanced for three straight days and closed the week up 3.5 percent at 8,062.21, as investors chased stocks following legislative approval of an amendment to the capital gains tax on Tuesday.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock in the local bourse, attracted strong buying and helped the index overcome technical resistance at 8,000 points, dealers said. The world’s largest contract chipmaker surged 6.22 percent on Friday to NT$111.
Meanwhile, Asustek Computer Inc (華碩) lagged behind amid weak sentiment after the world’s No. 5 PC brand provided lower-than-expected notebook shipment guidance for this year, they said. Asustek slid 5.32 percent on Friday to NT$258.
South Korea’s KOSPI gained 2.2 percent, while Singapore’s Straits Times Index rose 0.8 percent.
Australia’s S&P/ASX 200 Index climbed 1.4 percent. Kevin Rudd’s victory as leader of Australia’s governing Labor Party may boost consumer and company confidence before an election that could be held as early as August, according to investors, economists and business leaders.
Japan’s TOPIX climbed 3.1 percent to 1,133.84 this week, its second weekly gain. The yen lost 1.3 percent against the US dollar, down for a second week. A weaker yen boosts the outlook for Japanese exporter earnings when repatriated.
The Hang Seng Index advanced 2.7 percent, after falling to its lowest level in nine months on June 24. China’s Shanghai Composite Index dropped 4.5 percent, closing at the lowest level since January 2009 on Thursday.
In other markets on Friday:
Manila jumped 2.17 percent, or 137.28 points, from Thursday to 6,465.28.
Wellington rose 0.53 percent, or 23.21 points, to 4,440.17.
Mumbai jumped 2.75 percent, or 519.86 points, to 19,395.81.