Asian Stocks Gain, Led by Japan Shares, on BOJ Stimulus

Asian Stocks Gain, Led by Japan Shares, on BOJ Stimulus
By Adam Haigh & Toshiro Hasegawa - Apr 8, 2013 8:58 AM GMT+0800

Asian stocks rose as the yen fell for a third day after the Bank of Japan (8301)’s record stimulus. Markets in China may be affected after the country reported more infections from a deadly new strain of bird flu.
Toyota Motor Corp., the world’s largest carmaker, gained 2.4 percent, pushing Japan’s Nikkei 225 Stock Average toward its highest close in almost five years as the yen weakened to its lowest level since June 2009. Every company on the Japanese benchmark rose. BHP Billiton Ltd. advanced 1.6 percent in Sydney amid optimism central-bank stimulus in Japan, the U.S. and Europe will increase the speed of global economic growth.

The MSCI Asia Pacific Index (MXAP) gained 0.4 percent to 134.05 as of 9:52 a.m. in Tokyo as nine of 10 industry groups on the gauge advanced, before markets in Hong Kong and China opened. The measure fell last week as at least six people died following the fatal bird-flu outbreak in China, outweighing a surge in Japanese shares sparked by the unprecedented stimulus from the Bank of Japan’s new leadership.
“With the currency weakening to the 98 yen per dollar range, it’s almost 10 yen weaker than manufacturer estimates, so exporters earnings may come in above expectations this earnings season,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “The speed at which the Japanese currency weakens is getting harder to control by the government. That’s something that may be a concern in the mid-term.”

Regional Gauges
Japan’s Nikkei 225 added 2.3 percent. Australia’s S&P/ASX 200 Index rose 0.4 percent and South Korea’s Kospi index was little changed. New Zealand’s NZX 50 Index slid 0.6 percent.
BOJ officials said April 4 the central bank will increase its monthly bond purchases to 7.5 trillion yen ($76 billion), exceeding the 5.2 trillion yen forecast by economists surveyed by Bloomberg. They also suspended a cap on some bond holdings and dropped a limit on debt maturities. They set a two-year horizon for their goal of 2 percent inflation. Officials are working to end 15 years of deflation.
Japanese exporters advanced. Toyota gained 2.4 percent to 5,210 yen, a fourth day of gains. Honda Motor Co. (7267), which gets about 80 percent of its sales outside of Japan, gained 2.9 percent to 3,775 yen. The yen fell to 98.36 per dollar. A decline in the currency boosts the value of Japanese export earnings when repatriated.
What was “surprising was that the BOJ board voted almost unanimously for these significant moves in such a short time after the leadership change -- indicating strong leadership by Governor Haruhiko Kuroda,” said Michael Kurtz, Hong-Kong based head of global equity strategy at Nomura Holdings Inc., Japan’s largest brokerage. “These developments should all lend strong support to Japanese equities. Even though monetary policy may now remain unchanged for a while, the BOJ stands ready to take further action in the case of any loss of economic momentum, financial-market volatility or yen strengthening.”
Futures on the Standard & Poor’s 500 Index were little changed. The gauge dropped 0.4 percent April 5 after data showed the U.S. economy added less than half the number of jobs economists forecast in March.
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