Asian Stocks Rise on China Speculation; Exporters Decline

Asian stocks rose on speculation China will introduce measures to stimulate the economy after exports contracted by the most since 2009 as a stronger yen pulled down Japanese exporters.

Chow Tai Fook Jewellery Group Ltd. (1929), the world's biggest jewelery chain had a record gain in Hong Kong after same-store sales jumped on gold demand. Aeon Co., Japan's largest retailer, rose 1.4 percent in Tokyo after reporting a 9.8 percent increase in first-quarter operating profit. Fanuc Corp., a supplier of factory automation systems, slipped 1 percent, pacing losses among Japanese exporters.

The MSCI Asia Pacific Index added 0.9 percent to 132.63 as of 4:20 p.m. in Hong Kong, as the Bank of Japan begins a two-day policy meeting. All of the 10 industry groups on the gauge advanced, with about five shares falling for every four that rose. The gauge pared earlier gains of as much as 0.8 percent after Chinese exports unexpectedly fell in June.

"I don't think China is a house of cards that's about to fall, but it is something that needs to be focused on," said Tim Schroeders at Pengana Capital. "It's a risk for investors in terms of how it's managed from here on in. We expect more policy response and greater detail about how they are going to put their stamp on policy in the second half of this year. Growth is at lower levels than what we've seen in the past 10 years."

China's Economy

The MSCI Asia Pacific index fell 9 percent through yesterday from a five-year high on May 20 amid concern the U.S. Federal Reserve will begin tapering stimulus as China's economy slows and Japan puts off unveiling economic reform policies until after upper house elections later this month.

That left the gauge trading at 12.9 times average estimated earnings compared with 15 for the Standard & Poor's 500 Index (SPX) and 13.1 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Australia's S&P/ASX 200 Index climbed 0.4 percent, paring gains of as much as 1.4 percent after the China export data. The southern gauge closed at its highest since May 31 today. New Zealand's NZX 50 Index rose 0.7 percent.

Policy Speculation

South Korea's Kospi index slid 0.3 percent. Hong Kong's Hang Seng Index added 1.1 and the Shanghai Composite advanced 2.2 percent amid speculation that the trade data may prompt government measures to bolster growth.

Chinese exports unexpectedly dropped 3.1 percent in June, missing the median estimate of 39 economists surveyed by Bloomberg News who forecast a 3.7 percent gain from a year earlier. The U.S. and China start two days of strategic and economic talks today in Washington.

World economic growth will struggle to accelerate this year as a U.S. expansion weakens, China's economy levels off and Europe's recession deepens, the International Monetary Fund said. Global growth will be 3.1 percent this year, unchanged from the 2012 rate, and less than the 3.3 percent forecast in April, the Washington-based fund said yesterday, trimming its prediction for this year a fifth consecutive time.

Topix Falls

Japan's Topix index fell 0.1 percent, reversing earlier gains of as much as 0.6 percent as the yen rose against the dollar. The gauge is trading about 14 percent above the two-month low in June, having yesterday closed at the highest level since May 22. The gauge last week capped its biggest increase across three weeks since April 2009, amid a weakening yen and optimism Prime Minister Shinzo Abe will push through economic reforms after winning upper house elections on July 21.

Thirteen of 20 economists in a Bloomberg News survey completed July 8 saw no extra BOJ policy loosening in the next six months, a reversal from a poll in May. The central bank's board will leave the scale of its bond purchases unchanged at the two-day meeting starting today, according to every economist polled in the latest survey.

BOJ Stimulus

"The BOJ has got scope, given the context of policy adjustments that they've announced, to do something further," said Pengana's Schroeders. "A lot of the stimulus that has been put in place over the last six to twelve months is yet to bite. We're yet to see confirmation across the broader economy that things are working."

Futures on the Standard & Poor's 500 Index were little changed today. U.S. stocks yesterday rose for a fourth day amid optimism companies will report better-than-forecast earnings and that economic growth is strong enough to withstand any reduction in Federal Reserve stimulus.

Minutes of the Federal Open Market Committee's June 18-19 meeting will be released today and Fed Chairman Ben S. Bernanke will speak at a National Bureau of Economic Research conference.

Record Gain

Chow Tai Fook Jewellery surged 13 percent to HK$9.16 in Hong Kong, the most ever, as the jewelery chain posted a 48 percent gain in same-store sales for the first quarter.

Aeon gained 1.4 percent to 1,398 yen in Tokyo after its profit report, leading Bank of America analyst Hidehiko Aoki to increase his price estimate on the shares by 8.7 percent to 1,500 yen.

CSL Ltd. (CSL), an Australian maker of blood-derived therapies, climbed 2 percent to A$65.96 in Sydney, a second day of gains. The company will announce another share buyback of at least A$900 million ($824 million) at its full-year earnings release in August, Bank of America Corp. analyst Matthew Prior wrote in a report, upgrading the shares to buy from neutral.

Chailease Holding Co. (5871) jumped 6.9 percent to NT$67.9 in Taipei after the leasing and finance company reported revenue increased 21 percent in June to NT$2.21 billion ($73.6 million) from a year earlier.

Japanese Exporters

Japanese exporters declined as the yen gained as much as 0.9 percent today. A stronger yen reduces the value overseas income at carmakers and electronics manufacturers when repatriated.

Fanuc slid 1 percent to 14,760 yen. Honda Motor Co. (7267), Japan's second-biggest carmaker that gets about 83 percent of sales from overseas, lost 0.9 percent to 3,810 yen. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, dropped 0.7 percent to 2,187 yen.