Asian market responds positively to Japanese stimulus

Asian stocks rose after the Bank of Japan unexpectedly boosted monetary stimulus and amid speculation that the country’s $1.2 trillion Government Pension Investment Fund will increase holdings of equities.

The MSCI Asia Pacific Index added 1.3 per cent to 142.15 as of 7.40pm in Hong Kong, with all 10 industry groups climbing.

The gauge is heading for its biggest weekly advance since April 2013, rising 3.3 per cent this week.

The yen slumped 2.3 per cent to 111.75 per dollar, the lowest since 2007. Stocks began higher today after the Nikkei reported the nation’s public pension fund, the world’s largest, will today boost its allocation targets for local and foreign stocks to 25 per cent each and after the US economy grew faster than forecast.

Shares extended gains after BOJ policy makers voted 5-4 to target 80 trillion yen ($726 billion) annual expansion in the central bank’s monetary base.

“Today you’re getting a double boost with talk of the GPIF increasing its shares allocation and the BOJ pumping more cash in at a faster rate,” said Shane Oliver, Sydney based head of investment strategy at AMP Capital Investors.

“It had become increasingly apparent that what the BOJ was doing wasn’t enough and they needed to do more, and it’s always been a question of when they would do that. It’s an excellent outcome.”

Bloomberg