By Will McSheehy and Shani Raja
April 15 (Bloomberg) -- Asian stocks rose, sending the regional benchmark index to a 20-month high, emerging market currencies gained and rubber jumped as the recovery accelerates in the U.S., China and Japan, the world’s top three economies.
The MSCI Asia Pacific Index climbed 0.7 percent to 129.23 at 2:15 p.m. in Hong Kong, headed for its highest close since Aug. 1, 2008. Rubber in Tokyo climbed 2.7 percent to a 20-month high and oil topped $86 a barrel. Futures for the Standard & Poor’s 500 stock index and those for the Euro Stoxx 50 were little changed at 7:15 a.m. in London.
“There was a beautiful set of numbers out of the U.S. overnight,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which oversees $90 billion. “You’ve got good economic data showing consumers are jumping back on board fairly solidly, pointing to further gains.”
China’s economic growth accelerated at the fastest pace in almost three years in the first quarter at 11.9 percent, the statistics bureau said in Beijing today, after a U.S. report showed retailer sales climbed by the most in four months in March and the Federal Reserve said most of the country grew last month as consumer spending and manufacturing improved. Concern Japan may slip back into recession has “pretty much gone,” Bank of Japan Governor Masaaki Shirakawa said in Tokyo.
Japan’s Nikkei 225 increased 0.6 percent and advancers led declining stocks by three to one.
Taiwan Stocks
Taiwan’s Taiex index rose 0.9 percent to a three-month high after Gartner Inc. said global personal-computer shipments rose 27 percent in the first quarter. Compal Electronics Inc., the world’s largest laptop maker, gained 0.8 percent, the most in two weeks. Hon Hai Precision Industry Co., the biggest contract manufacturer of electronics, increased 1.1 percent.
South Korea’s won rose while bond risk declined after Moody’s Investors Service raised the country’s credit rating to A1 from A2 yesterday, its highest ever grading from the risk assessor. Moody’s also upgraded ratings on South Korea’s state- run companies and 10 financial institutions, citing accelerating economic growth.
The won climbed 0.4 percent against the dollar to 1,108.05, strengthening to levels reached before the collapse of Lehman Brothers Holdings Inc. in 2008, as foreign investors bought local stocks. Hana Financial Group Inc. and Industrial Bank of Korea both climbed more than 3 percent after brokerages including Meritz Securities Co. and Hyundai Securities Co. said the financial industry will benefit from the rating increase.
Strength of Recovery
“There’s increased risk appetite because people are more comfortable with the global growth backdrop,” Krishna Hegde, Asia credit strategist at Barclays Capital in Singapore, said in a phone interview. “We saw strong growth numbers out of China today, for example, and people are more confident about the strength of the recovery than they were, say, six months ago.”
The cost of credit-default swaps protecting South Korean government bonds fell to 72.8 basis points from a New York close of 74.4 basis points yesterday, according to CMA DataVision. That’s the lowest since May 23, 2008, CMA data show.
The extra yield investors demand to hold state-run Korea Electric Power Corp.’s $500 million in five-year, 5.5 percent notes rather than Treasuries dropped to 140 basis points, the lowest since July 14 when the bonds started trading, according to RBS Financial prices on Bloomberg. A basis point is 0.01 percentage point.
Yuan forwards gained to the strongest level in a week on speculation Chinese policy makers may allow appreciation to resume soon as economic growth accelerates.
Yuan Speculation
Goldman Sachs Group Inc.’s chief global economist Jim O’Neill said in an interview in London yesterday China may strengthen the yuan by between 2 percent and 5 percent as early as next week. Fed Chairman Ben S. Bernanke said a more flexible currency would help the world’s third-largest economy keep inflation under control.
Twelve-month non-deliverable forwards climbed 0.2 percent to 6.6140 per dollar, reflecting bets the currency will strengthen 3.2 percent from the spot rate of 6.8258, according to data compiled by Bloomberg.
Risk in Vogue
“With the slew of economic data signaling the expansion of the global economy and with liquidity remaining ample, risk trades will remain in vogue,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest banking group. “This trade will encourage capital flows into riskier assets and away from funding currencies such as the yen.”
Rubber for September delivery climbed as much as 5.6 yen to 335.4 yen per kilogram, the highest for the most active contract since July 2008.
Oil climbed for a second day in New York, trading above $86 a barrel, after a U.S. report showed an unexpected drop in supplies as gasoline demand increased the most in five years.
--With assistance from Jungmin Hong in Seoul, Ben Sharples in Melbourne, Yasuhiko Seki in Tokyo, Katrina Nicholas in Singapore, Frances Yoon and Bob Chen in Hong Kong. Editors: Will McSheehy, Patrick Chu
(businessweek.com)
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