Asian stocks rose for the fourth consecutive week, the longest rally in 18 months, as G20 leaders agreed on measures to fight the global recession.
Toyota Motor Corp, which gets 37 percent of its sales from North America, gained 14 percent in Tokyo as US auto sales rose from a 27-year low. HSBC Holdings PLC, Europe’s largest bank, rose 13 percent in Hong Kong as US Treasury Secretary Timothy Geithner said economies are showing “traction.” China Petroleum & Chemical Corp (中國石油化學), Asia’s biggest oil refiner, climbed 10 percent after Goldman Sachs Group Inc recommended investors buy the stock.
“We’ve seen some tangible evidence that the global economy is on the path to recovery,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co, which oversees about US$6.1 billion. “This is all about sentiment and people are interpreting whatever they see in a positive way.”
The MSCI Asia-Pacific Index rose 1.4 percent to 86.70 the past five days, the first time stocks have rallied for a fourth-straight week since October 2007.
Consumer-related and financial companies led the advance on the gauge, which has jumped more than 20 percent from a five-year low on March 9, the level that technically indicates a bull market.
Hong Kong’s Hang Seng Index rose 3 percent, erasing its decline for the year. Japan’s Nikkei 225 Stock Average added 1.4 percent, while South Korea’s KOSPI Index added 3.7 percent and Australia’s S&P/ASX 200 Index 1.7 percent.
Governments from the US to Japan are widening measures to ease the financial crisis, which has caused US$1.29 trillion of losses worldwide, and to avert what the World Bank predicts will be the first global economic contraction since World War II.
Following an April 2 summit in London, G20 policy makers proposed a regulatory blueprint that places stricter limits on hedge funds and other financiers, while pledging to triple the resources of the International Monetary Fund and to give China and other developing economies a greater say in the way the world economy is run.
MSCI’s Asian benchmark gauge has pared losses this year to about 3.2 percent on signs government action to bolster growth is working. The gains drove average valuation of companies on the index to 17.7 times profit, the highest level since Nov. 30, 2007, data compiled by Bloomberg show.
“I was pleasantly surprised by the G20’s proposals but that doesn’t mean I’m buying into this rally,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which holds about US$90 billion in assets.
“Policy is certainly working in the right direction, but it’s a bit premature to say we’ve reached the bottom,” he said.
Elpida Memory Inc soared 15 percent to ¥845 in Tokyo after beating US rival Micron Technology Inc to partner with Taiwan Memory Co (台灣記憶體公司).
Taiwanese share prices are expected to gain further next week as foreign funds continue to come in on a stronger New Taiwan dollar, dealers said on Friday.
Short-covering by foreign institutional investors is likely to lift the financial sector, which had been badly hit by the global financial crisis and lagged behind the broader market, they said.
China chips that have close business ties with Beijing may benefit from optimism towards Beijing’s efforts to boost its domestic demand, they said.
However, investors have turned cautious about the bellwether electronic sector ahead of the releases of last month’s revenue reports starting from next week after many firms claimed they have received large orders from China, dealers said.
The market is expected to test the nearest resistance level of around 5,700 points next week, while adequate liquidity may keep the index above 5,300 points if any profit taking emerges, dealers said.
For the week to Friday, the weighted index rose 138.93 points or 2.58 percent to 5,529.63 after an 8.65 percent increase a week earlier.
Average daily turnover stood at NT$122.78 billion (US$3.68 billion), compared with NT$133.74 billion in the previous week.
The market suffered heavy profit taking on Monday after a recent strong showing, but returned to the upward trend over the rest of the week.
“The movements showed investors were willing to chase prices. They have been upbeat that the global economy will improve and the market upside will continue,” Grand Cathay Securities (大華證券) analyst Mars Hsu said.
Other Asian markets on Friday:
KUALA LUMPUR: Up 0.21 percent. The Kuala Lumpur Composite Index gained 1.94 points to close at 907.0.
MANILA: Up 2.30 percent. The composite index rose 45.71 points to 2,028.59.
WELLINGTON: Up 1.11 percent higher. The NZX-50 index rose 28.68 points to 2,614.48.
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