Asian stocks rise to 17-month high
Asian stocks are on the advance, with the regional benchmark index heading for the highest close since August 2011.
Japanese shares gained after Bank of Japan Governor Masaaki Shirakawa said the central bank will pursue powerful monetary easing. Olympus, a maker of cameras and endoscopes, jumped 7.7 per cent in Tokyo after Goldman Sachs raised the stock's rating to buy. Billabong International surged by 16 per cent as Australia's
largest surfwear maker received a takeover offer from VF Corp. and Altamont Capital Partners. LG Display Co. slid 3.5 per cent in Seoul, pacing declines among Apple suppliers, after the Nikkei newswire reported Apple scaled back production plans for the iPhone 5.
The MSCI Asia Pacific Index rose 0.2 per cent to 132.46 as the gauge is extending a rally for a third consecutive month after reports showed China's economy is recovering and Japanese shares gained on speculation new Prime Minister Shinzo Abe will pursue more aggressive policies to stimulate the world's third-largest economy.
“Broadly speaking, share prices in Asia will be higher in the next 12 months,” said Tim Schroeders, at Pengana Capital in Melbourne. “We've seen too much enthusiasm over the past two months or so in light of a fairly muted recovery. The debt-ceiling negotiation in the US is a substantial issue in the near term that the market has got to confront and that's going to hold things back.”
“We believe Japanese equities still enjoy further upside given low valuations and prevalent underweight positions among global funds," said Michael Kurtz, of Hong-Kong based head of global equity strategy at Nomura Holdings, Japan's largest brokerage. Decisions on a new Bank of Japan governor and a proposed consumption tax increase “are likely to sustain further easing expectations, yen weakening, and other stimulus measures, to the support of Japanese equity prices”.
The yen dropped to as low as 89.67 per dollar yesterday, the weakest level since June 23, 2010, before rebounding to 89.06 as of 1:55 p.m. Tokyo time. Japanese Economy Minister Akira Amari said the nation faces risks from any excessive decline in the yen, highlighting limits on Prime Minister Abe's campaign to drive down the currency. A weaker yen boosts overseas income for exporters when repatriated.