By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) -- Asian stocks made strong gains
Wednesday, as investors picked up on the advance on Wall Street --
where the Dow industrials hit an all-time high -- to push stocks
higher from Tokyo to Hong Kong.
Adding to a near-2% gain made so far this week on optimism for
another round of policy loosening to lift the Japanese economy out
of deflation, the Nikkei Stock Average climbed 1.2% in Tokyo to
trade at its highest level in nearly five years.
In Hong Kong, the Hang Seng Index rose 0.9%, while the Shanghai
Composite Index climbed 0.3% on the Chinese mainland.
Similarly, Australia's S&P/ASX 200 index rose 1%, while
South Korea's Kospi advanced 0.5%, and Singapore's Straits Times
Index added 0.6%.
The gains across Asia came after Wall Street rallied Tuesday as
a bullish survey on the service sector fed into indications that
the U.S. economy is gradually improving. Read: U.S. stock rally
lifts Dow to record finish
For global equities, "the medium-term picture still looks
favorable," said Crédit Suisse emerging-markets strategist Adrian
Zuercher. "Central banks are being very accommodative and are
acting as a put option for the capital markets."
"The dearth of investment alternatives in an environment of
record-low market interest rates by now across almost every
fixed-income asset segment remains the most compelling argument in
favor of stocks. The prevailing 'yield drought' is veritably
forcing investors into stocks," Zuercher said.
While the Dow industrials (DJI) ended at a record, most Asia
benchmarks have a long way to go to match that performance. The
Nikkei Average, for example, remains around 70% off its record
closing high of 38,915.87, hit in December 1989, just ahead of the
bubble bursting that resulted in Japan's "Lost Decade."
Other Asian benchmarks also well shy of their all-time records
included the Kospi -- around 10% off its 2,228.96 record close
reached May 2, 2011 -- and the Australian market -- around 25% off
its 6,828.71 record on Nov. 1, 2007.
Chinese markets are lagging as well. Hong Kong reached its
all-time high of 31,638.22 on Oct. 30, 2007, while Shanghai's
record of 6,092.06 was hit on Oct. 16 of the same year.
Wednesday saw Hong Kong-listed banks gain, with Agricultural
Bank of China Ltd (ACGBF) up 2.6%, China Citic Bank Corp. (CHCJY)
higher by 1.5%, and Haitong International Securities Group Co. up
1%.
Shares of Standard Chartered PLC rose 1.2% following on from
gains in London after the emerging-markets-focused bank posted a
10th straight year of record profit. Read: Standard Chartered: Good
'13 start after flat '12
On the Chinese mainland, property stocks recovered some ground
lost this week, with China Vanke Co. up 3.2% in Shenzhen.
Shanghai-listed bank stocks were lower, however, with Bank of
China Ltd. (BAC) down 0.7% and China Citic Bank Corp. losing
1.5%.
Steepening local yield curves should become the "new norm,"
given a stronger global economy and a reluctance among central
banks to raise rates, with the move likely to broadly benefit Asian
financials, said Asia bank analysts at Deutsche Bank.
Still, "while history suggests that share prices of Japanese
banks and Chinese financials tend to perform best when global and
domestic yield curves steepen, we maintain a neutral stance on
China on sustainability concerns over its credit growth," the
analysts said.
Financials and real-estate firms extended a recent advance in
Tokyo, made on the back of policy-easing hopes, with the Bank of
Japan set to issue its first policy decision under a new governor
later this week.
Nomura Holdings Inc. (NMR) climbed 1.5%, insurer Tokio Marine
Holdings Inc. (TKOMF) rose 2%, and Sumitomo Realty &
Development Co. (8830.TO) improved by 2.4%.
Sharp Corp. (SHCAF) soared 12.4% after opening bid-only
following several Japanese news reports that South Korea's Samsung
Electronics Co. (SSNLF) would invest some 10 billion yen ($107
million) in the struggling Japanese electronics firm. Read: Samsung
Electronics may buy stake in Japan's Sharp
Gains spread through much of the rest of the Japanese technology
sector, with Pioneer Corp. (6773.TO) jumping 6.4%, and Toshiba
Corp. (TOSYY) climbing 2.3%.
Samsung Electronics shares rose 0.3% in South Korea amid reports
of the Sharp investment, while rival chip maker SK Hynix Inc.
(HXSCL) climbed 3.2%.
Relatively high-yielding Australian banks were advancing again
in Australia on Wednesday, with Australia & New Zealand Banking
Group Ltd. (ANEWF) improving by 1.7%, and National Australia Bank
Ltd. (NAUBF) up 2.1% following a report it plans almost $1 billion
in cost cuts. Read: Australia's NAB reportedly targeting cost
cuts
Australian interest rates have been slashed in the last year as
the central bank tried to inject some life into non-mining sectors
of the Australia economy.
Data out Wednesday showed the economy grew at 0.6% in the
fourth-quarter of 2012, meeting economist expectations, for annual
growth of 3.1%. Read: Australia's economy grows on exports, rate
cuts
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