Asian Shares Rise as Traders' Focus Turns From Brexit to Easing
July 04 2016 - 1:40AM
Dow Jones News
Shares in Asia rose Monday as investors bet that global central
banks would introduce easing measures to encourage economic
growth.
Japan's Nikkei Stock Average was up 0.4%, Australia's
S&P/ASX 200 rose 0.2%, and Korea's Kospi gained 0.3%. Hong
Kong's Hang Seng Index rose 1.8%, and China's Shanghai Composite
Index gained 1.8%.
Investors across the region were buying stocks in the hopes that
central banks, in particular the Bank of Japan, would soon loosen
policies by cutting interest rates or expanding asset-buying
programs, said Gavin Parry, managing director of Parry
International Trading.
Such policies would be "equity positive," he added, as corporate
borrowing costs become lower when liquidity enters the financial
system.
The MSCI AC Asia Pacific Index, a broad measure of stocks in the
region, was on track Monday to recoup all its losses since the
close of June 23, when the U.K.'s decision to leave the European
Union roiled markets and sent shares tumbling.
Investor hopes for looser monetary policies were fully apparent
in China on Monday. Domestic stock investors were betting that the
U.S. Federal Reserve would hold off on raising interest rates at
all this year, instead of doing so twice as officials had
projected, analysts said. That could keep the U.S. dollar from
strengthening rapidly, and generate demand for commodities stocks,
which are priced in the greenback.
In a sign of that expected demand, China's CSI 300 Materials
subindex surged 3.2%. At least a dozen stocks, including Inner
Mongolia Xingye Mining Co. and nonferrous metals producer Shenzhen
Zhongjin Lingnan Nonfemet Co. rose 10%, hitting their daily
price-movement limit.
Meanwhile, shares of China Vanke Co., China's largest
real-estate developer by market capitalization, sank 10% after it
resumed trading following a six-month halt. The developer has been
embroiled in a high-stakes battle among major shareholders for
control of the company.
"The trading resumption of China Vanke Co. means that short-term
uncertainty has been exhausted and the market will continue to
operate on [its] original logic," says Deng Wenyuan, an analyst at
Soochow Securities. "Abundant liquidity has driven up commodities
prices amid growing risk-off sentiment."
In Hong Kong, property stocks that were perceived to be
undervalued led gains. Investors focused on a report last Friday
from Daiwa Capital Markets that argued shares of Hong Kong-focused
real-estate developers are collectively worth US$200 billion more
than they are priced by the market.
Hong Kong's largest home builder by market cap, Sun Hung Kai
Properties Ltd., rose 3.8%, while Cheung Kong Property Holdings
Ltd. jumped 4.9%.
In other markets, the Australian dollar sank 0.4% in early Asian
trade after preliminary federal election results showed a tight
race between two political parties vying for control of
Parliament.
Yifan Xie contributed to this article.
Write to Dominique Fong at Dominique.Fong@wsj.com
(END) Dow Jones Newswires
July 04, 2016 01:25 ET (05:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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