Asian Stocks Rebound From Biggest Decline in Seven Months

Hong Kong (Mar 21)   Asian stocks rose, with a regional index of shares outside Japan rebounding from the biggest loss yesterday since August.

Li & Fung Ltd. surged 17 percent in Hong Kong after the world’s largest supplier of clothes and toys to retailers reported profit that beat analyst estimates and proposed to spin off its branding and licensing business. GOME Electrical Appliances Holding Ltd. (493) gained 7.5 percent in the city as earnings exceeded forecasts. Metcash Ltd. slumped 9.8 percent in Sydney after the consumer goods marketing firm missed profit projections.

The MSCI Asia Pacific excluding Japan Index advanced 0.3 percent to 450.45 as of 9:52 a.m. in Hong Kong, paring this week’s slide to 0.8 percent. The measure fell 1.7 percent yesterday, taking its loss this year to 4.1 percent as data from exports to industrial output showed signs of a slowdown in China and Federal Reserve Chair Janet Yellen indicated U.S. interest rates could rise as soon as six months after the end of the central bank’s bond-buying program. HSBC Holdings Plc and Markit Economics’ gauge of Chinese manufacturing is due March 24.

“The markets have a lot to digest with an unofficial U.S. rate rise potentially mid next year,” Tim Schroeders, a Melbourne-based money manager who helps oversee $1 billion in equities at Pengana Capital Ltd., said by phone. “You don’t want to stick your neck out too far. We’re not overly cautious, but respectful that the dynamics are changing. The focus is going to come back to China on Monday.”

Hong Kong’s Hang Seng Index (HSI) added 0.3 percent, South Korea’s Kospi index climbed 0.6 percent and Australia’s S&P/ASX 200 Index rose 0.5 percent. Singapore’s Straits Times Index increased 0.4 percent, whiloe Taiwan’s Taiex index gained 0.2 percent. Japanese markets are closed for a holiday. China’s Shanghai Composite Index and New Zealand’s NZX 50 Index both slid 0.1 percent.

Bear Market

Hong Kong’s Hang Seng China Enterprises Index (HSCEI) of mainland stocks traded in the city gained 0.3 percent, following yesterday’s 1.7 percent drop which brought losses from its Dec. 2 high past the 20 percent threshold that some investors consider a bear market. Declines came as the yuan sank to a one-year low amid deepening concern the world’s second-largest economy is slowing. The CSI 300 Index of China’s 300 largest firms fell to a five-year low yesterday as Goldman Sachs Group Inc. cut its growth outlook for China.

The HSBC/Markit China manufacturing purchasing managers’ index will come in at 48.7 for this month from 48.5 in February, according to analysts surveyed by Bloomberg. Readings below 50 signal a contraction.

Yellen this week said the quantitative-easing program used to stimulate the U.S. economy would end this fall should the central bank continue to taper in measured steps. There will be “considerable time” between the end of the stimulus and the first rate increase, meaning “six months or that type of thing,” she said.

Source:  Bloomberg