Inside Financial Markets

Asian Stocks Advance Before Fed Meeting; Japan’s Topix Jumps

asiaAsian Stocks Advance Before Fed Meeting; Japan’s Topix Jumps

Bloomberg: Asian stocks rose, with the regional benchmark index heading for its biggest two-day advance since April 11, as investors await this week’s Federal Reserve meeting. Japan’s Topix Index advanced after falling the past four weeks.

GCL-Poly Energy (3800) Holdings Ltd., the largest maker of materials used in solar panels, advanced 6.6 percent in Hong Kong on optimism China will boost domestic demand for solar-generated electricity. Chiyoda Corp. (6366), a builder of industrial facilities, gained 7.8 percent in Tokyo after Bank of America’s Merrill Lynch raised its rating to buy. Nomura Real Estate Office Fund Inc., partly-owned by Japan’s largest brokerage, slumped 13 percent after announcing a share sale.

The MSCI Asia Pacific Index climbed 1 percent to 132.13 as of 12:32 p.m. in Tokyo, with almost three stocks gaining for every one that fell on the measure. The gauge dropped 3 percent this month through last week amid concern central banks are losing appetite for more economic stimulus. The Hang Seng China Enterprises Index declined for a record 12 straight days through June 14 on concern that growth is slowing in the world’s No. 2 economy.

“There are a lot of very interesting opportunities,” Catherine Yeung, Hong Kong-based investment director at Fidelity Investment Management Ltd., which oversees about $248 billion globally, told Bloomberg Television from Singapore. “You do have to be stock-specific across whether its China, Asean or Japan itself. The Fed has to walk a very fine balance. Ultimately, tapering is a good thing because it means the economy is recovering somewhat.”

Regional Gauges

Japan’s Topix index jumped 2.1 percent, while the benchmark Nikkei 225 Stock Average gained 2.2 percent. Australia’s S&P/ASX 200 Index (AS51) added 0.3 percent and New Zealand’s NZX 50 Index rose 0.4 percent. Singapore’s Straits Times Index climbed 0.8 percent and Taiwan’s Taiex Index increased 0.6 percent. Hong Kong’s Hang Seng Index advanced 1.3 percent, while China’s Shanghai Composite Index swung between gains and losses. South Korea’s Kospi index fell 0.1 percent.

Shares on the MSCI Asia Pacific Index traded at 12.6 times estimated earnings as of June 14, compared with 14.7 times for the Standard & Poor’s 500 Index and 12.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. The MSCI Asia.

Almost $3 trillion has been erased from global markets since Fed Chairman Ben S. Bernanke said May 22 U.S. policy makers could curb stimulus should the job market improve. The Federal Open Market Committee will meet this week and announce its interest-rate decision on June 19. All 37 economists surveyed by Bloomberg News predict U.S. borrowing costs will be kept in a zero to 0.25 percent range.

U.S. Growth

Futures on the S&P 500 Index added 0.4 percent today. The gauge slipped 0.6 percent on June 14 after the International Monetary Fund lowered its 2014 U.S. economic growth forecast to 2.7 percent from 3 percent. The Washington-based lender urged the Fed to carefully manage its plans to exit from stimulus to avoid disrupting financial markets.

“The Fed will probably make some comments to calm the volatility we’ve seen,” said Chris Green, Auckland-based strategist at First NZ Capital Ltd., a broker and wealth management company. “It’s likely to stick to the September timeframe for withdrawing some stimulus, but if there’s any indication that the Fed will withdraw stimulus sooner than expected, then we will see a big reaction.”

The Chicago Board Options Exchange Volatility Index, or VIX (VIX), climbed to an almost four-month high last week as investors scrutinized economic data to determine whether growth is strong enough to prompt the Fed to scale back stimulus measures. Volatility on the Nikkei 225 fell 4.2 percent to 39.84 today, indicating traders expect a swing of about 11 percent for the measure in the next 30 days.

Solar Companies

Solar energy-related companies rallied after China said it will boost domestic demand for solar-generated electricity and provide easier financing to manufacturers as rising trade tensions slow exports.

GCL-Poly Energy jumped 6.6 percent to HK$2.09 in Hong Kong. Solargiga Energy Holdings Ltd., a Chinese maker of solar wafers, advanced 7.3 percent to 44 Hong Kong cents.

Chiyoda, a builder of facilities from oil refineries to pharmaceutical plants, climbed 7.8 percent to 1,138 yen in Tokyo. Merrill Lynch raised its rating to buy from underperform, saying company may seek partners to compete for shale gas projects in the U.S.

Among stocks that fell, Nomura Real Estate Office (8959) slumped 13 percent to 448,500 yen in Tokyo. The company said on June 14 it plans to raised 35 billion yen ($369 million) in a share sale, proceeds from which will be use to acquire property and repay debt.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

Add comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Canadian Securities Institute


CSI is part of Moody's Analytics Learning Solutions, which offers educational programs and credentials throughout the world.

Email Newsletter

Subscribe to receive inspiration, news, and ideas in your inbox.

Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)