Inside Financial Markets

Asian Stocks Extend Two-Week High After China Outlines Reforms

asian markets1Asian Stocks Extend Two-Week High After China Outlines Reforms

Asian stocks rose for a third day, with the benchmark index extending a two-week high, after China vowed to carry out the broadest expansion of economic freedoms since at least the 1990s.

China Mengniu Dairy Co., a maker of milk products, jumped 4.8 percent after policy makers pledged to relax the nation’s one-child policy. China Galaxy Securities Co. jumped 7.2 percent in Hong Kong as prospects for financial reform boosted brokerages. Dwango Co. soared by the daily limit in Tokyo for a second day after saying Nintendo Co. bought a stake in the company that provides content through mobile phones.

The MSCI Asia Pacific Index added 0.8 percent to 142.64 as of 12:33 p.m. in Tokyo after closing at the highest level since Oct. 31 last week. All 10 of the measure’s industry groups gained. China pledged to allow more private investment in state-controlled industries, ease its family-planning policy and expand farmers’ land rights, according to a Communist Party policy decision published by Xinhua News Agency on Nov. 15.

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“The investors who were on the sidelines don’t have to hesitate anymore,” Zeng Xianzhao, an analyst at Everbright Securities Co. in Chongqing, said by phone today. “In the next few years, we will see faster implementation of these reforms and the efficiency of the enterprises will improve as well. There were noises about possible disappointment at the plenum; this got rid of all such negative rumors.”

Hong Kong’s Hang Seng Index soared 2 percent on volume 193 percent higher than the 30-day intraday average. The HSI Volatility Index, which measures the cost of options on the Hong Kong equity gauge, jumped 7.5 percent today, poised for the biggest advance since Sept. 30. The Hang Seng China Enterprises Index of mainland companies listed in the city surged 3.9 percent, heading for the highest close since May. China’s Shanghai Composite Index added 1.4 percent.

Bull Run

Chinese shares are on the cusp of a historic bull run, according to a research note from Jefferies Group LLC. Comprehensive reform decisions from the plenum impressed “tremendously,” with a significance rivaling that of Deng Xiaoping declaring the opening of China in 1978, analysts led by Christie Ju wrote.

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Japan’s Topix (TPX) index added 0.3 percent as the yen maintained its slide past 100 per dollar. The Nikkei 225 Stock Average rose 0.1 percent after jumping 7.7 percent last week, the steepest rally in almost four years. Japanese stocks are poised to surpass this year’s high set in May as a stronger U.S. economy weakens the yen and Prime Minister Shinzo Abe’s reflation policy leads to wage increases, according to BNP Paribas Investment Partners SA and SMBC Nikko Securities Inc.

Regional Gauges

South Korea’s Kospi index climbed 0.4 percent while data showed the nation’s producer prices fell 1.4 percent last month from a year ealier. Taiwan’s Taiex Index gained 0.2 percent and Singapore’s Straits Times Index advanced 0.2 percent. Australia’s S&P/ASX 200 Index dropped 0.3 percent, while New Zealand’s NZX 50 Index lost 0.3 percent.

Futures on the Standard & Poor’s 500 Index declined 0.1 percent. The measure rose 1.6 percent last week to close at an all-time high after Janet Yellen, nominated to succeed Ben S. Bernanke as the Fed chairman, said the central bank should take care not to withdraw stimulus too early from an economy that is operating well below potential.

“They are not willing to move yet on tapering,” said Evan Lucas, Melbourne-based market strategist at IG Ltd. “That’s a positive thing for risk and that means equities are going to be in the green.”


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

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