Japan Shares Jump Most in Four Years
Possibility of more stimulus from Beijing boosts sentiment
Stocks in Japan jumped the most in more than four years Wednesday, shaking off unease about slowing growth in China amid a tentative rebound in Chinese stocks.
The region’s shares and currencies traded higher after falling in the doldrums Tuesday, when weak Chinese trade data stoked concerns about a slowdown in the world’s second-largest economy. Japanese stocks dropped to a seven-month low.
But on Wednesday, investor sentiment toward China took a positive turn.
China’s finance ministry said Tuesday evening that the country would roll out a “more forceful” fiscal policy to stimulate economic growth, which it said faced downward pressure. The Ministry of Finance said in a statement that it would allocate more funds to support some infrastructure projects and implement tax cuts for small businesses. It also said it would accelerate the approval process for duty-free stores to boost construction.
“Authorities [have] released a slew of policies aimed at rebuilding investor confidence by introducing mid-to-long term market-regulating measures,” said Jacky Zhang, analyst at BOC International.
Optimism that China was taking steps to help its economy pushed the Shanghai Composite Index up 1.7%, and the Hang Seng Index was up 3%.
“Any signal that [China’s] government is going to do more to support growth is going to help sentiment,” especially measures on top of monetary easing, added Bernard Aw, market analyst at IG. Beijing has approved nearly 200 billion yuan of infrastructure projects since July, according to an article by state-owned Securities Daily Wednesday.
In Japan, shares were back in positive territory for the year, rising by more than 5% Wednesday, after falling to a year-to-date loss Tuesday.
A broad regional rally helped Japan shares rise throughout the morning: The Nikkei Stock Average was last up 5.5%, on track for its largest percentage gain in one day since March 2011.
Among leaders in their sectors, electronics-parts maker Murata Manufacturing Co. Ltd. was up 7.8%, medical and health care business Terumo Corp. gained 8.9% and auto-parts maker Denso Corp. was up 9.6%.
South Korea’s Kospi was up 2.4% and Australia’s S&P ASX 200 gained 1.7%.
Analysts said a late-day rally in China Tuesday lifted global shares, and created buying momentum that carried into Asia when markets opened Wednesday morning. U.S. stocks rallied overnight for their biggest one-day gain in two weeks, after Shanghai stocks surged Tuesday. Analysts speculated Shanghai’s 2.9% jump yesterday was led by government buying.
Nevertheless, many investors and analysts are bracing for further volatility. They remain anxious about the health of China and the global economy and are on alert ahead of next week’s meeting of the U.S. Federal Reserve, when the central bank could raise short-term interest rates for the first time in nearly a decade.
“The market focus isn’t [on Japan]. It’s on China and the U.S.,” said Hideyuki Ishiguro, senior strategist at Okasan Securities. “The Federal Open Market Committee meeting isn’t over yet.”
Data Tuesday showed China’s exports fell 5.5% in August from a year earlier in dollar terms, according to the General Administration of Customs, while imports dropped 13.8%. While analysts said the data weren’t surprising, the figures underscore how China’s economic slowdown is affecting trade, particularly for countries that focus their exports on Chinese demand.
In currencies, the Malaysian ringgit strengthened by 0.7% to trade at 4.0356 against the U.S. dollar, after having hit a string of 17-year lows recently. It traded as weak as 4.3695 against the U.S. dollar Tuesday.
The Australian dollar strengthened by 0.3% to trade at $0.7043, its highest in days.
In Hong Kong, Power Assets Holdings Ltd. led gains after the company announced a planned merger with Cheung Kong Infrastructure Holdings Ltd. Shares of the two firms gained 6.2% and 4.4% respectively.
Source: WSJ – Japan Shares Jump Most in Four Years
