Asian Stocks Gain, Led by Japan Shares, on BOJ Stimulus – Businessweek

Asian stocks outside Japan dropped,
led by Chinese shares after the country reported more infections
from a deadly new strain of bird flu. Japanese shares rose and
the yen fell for a third day after the Bank of Japan (8301)’s record
stimulus.

AIA Group Ltd., the third-largest Asia-based insurer by
market value, declined 1.4 percent in Hong Kong. Toyota Motor
Corp., the world’s biggest carmaker, gained 3 percent, pushing
Japan’s Nikkei 225 Stock Average toward its highest close in
almost five years as the yen weakened to its lowest level since
June 2009. All but 14 companies on the Japanese gauge advanced.

The MSCI Asia Pacific Excluding Japan Index (MXAP) slid 0.5
percent to 459.23 as of 11:15 a.m. in Tokyo. The measure last
week posted its biggest decline of the year as at least six
people died following the fatal bird-flu outbreak in China.

“There’s going to be near-term pressure no matter how you
cut it,” said Marco Li, Hong Kong-based portfolio manager at
Manulife Asset Management, which oversees $238 billion. “You
have this overhang now, and until you get clarity, people will
see that as a potential risk for further exacerbation.”

China tried to ease concerns that a new strain of bird
influenza will spark an epidemic as authorities reported three
more infections of the deadly H7N9 virus that’s killed six
people since March. The outbreak of the virus caused soybean
futures and shares of Chinese companies traded in Hong Kong to
fall April 5 amid concern the disease will hurt demand in the
world’s second-largest economy.

Chinese Stocks

Hong Kong’s Hang Seng Index lost 0.3 percent, as AIA slid
1.4 percent to HK$32.50. China’s Shanghai Composite dropped 1.7
percent, reopening after a holiday. The Shanghai measure has
slumped in the past two months amid concern steps to cool
property prices will drag on economic growth.

Australia’s S&P/ASX 200 Index was little changed and South
Korea’s Kospi index slipped 0.3 percent. New Zealand’s NZX 50
Index slid 0.9 percent and Singapore’s Straits Times Index lost
0.2 percent. Taiwan’s Taiex Index retreated 2.4 percent as the
market reopened after a holiday. EVA Airways Corp., Taiwan’s
second-largest carrier, slumped 6.8 percent to NT$16.45.

Japan’s Nikkei 225 added 2.1 percent in local currency
terms and rose 1.1 percent when priced in U.S. dollars, after
unprecedented stimulus from the Bank of Japan’s new leadership
sparked a surge in Japanese shares.

“With the currency weakening to the 98 yen per dollar
range, it’s almost 10 yen weaker than manufacturer estimates, so
exporters earnings may come in above expectations this earnings
season,” said Norihiro Fujito, a senior investment strategist
at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “The
speed at which the Japanese currency weakens is getting harder
to control by the government. That’s something that may be a
concern in the mid-term.”

Bond Purchases

BOJ officials said April 4 the central bank will increase
its monthly bond purchases to 7.5 trillion yen ($76 billion),
exceeding the 5.2 trillion yen forecast by economists surveyed
by Bloomberg. They also suspended a cap on some bond holdings
and dropped a limit on debt maturities. They set a two-year
horizon for their goal of 2 percent inflation. Officials are
working to end 15 years of deflation.

Japanese exporters advanced. Toyota gained 3 percent to
5,240 yen, a fourth day of increases. Honda Motor Co. (7267), which
gets about 80 percent of its sales outside of Japan, rose 2.9
percent to 3,775 yen. The yen fell to 98.38 per dollar. A
decline in the currency boosts the value of Japanese export
earnings when repatriated.

‘Strong Leadership’

What was “surprising was that the BOJ board voted almost
unanimously for these significant moves in such a short time
after the leadership change — indicating strong leadership by
Governor Haruhiko Kuroda,” said Michael Kurtz, Hong-Kong based
head of global equity strategy at Nomura Holdings Inc., Japan’s
largest brokerage. “These developments should all lend strong
support to Japanese equities. Even though monetary policy may
now remain unchanged for a while, the BOJ stands ready to take
further action in the case of any loss of economic momentum,
financial-market volatility or yen strengthening.”

Futures on the Standard & Poor’s 500 Index were little
changed. The gauge dropped 0.4 percent April 5 after data showed
the U.S. economy added less than half the number of jobs
economists forecast in March.

To contact the reporters on this story:
Adam Haigh in Sydney at
ahaigh1@bloomberg.net;
Kana Nishizawa in Hong Kong at
knishizawa5@bloomberg.net

To contact the editor responsible for this story:
Nick Gentle at
ngentle2@bloomberg.net