Asian Stocks Advance for Fifth Week as BOJ Adds Stimulus

Asian shares rose for a fifth week, the longest winning streak since March, as Japan’s Liberal Democratic Party regained power on pledges to boost economic stimulus and the country’s central bank added to asset purchases. Stocks pared gains as U.S. budget talks stalled.

Nomura Holdings Inc. (8604) climbed 18 percent to lead advances among Japanese brokerages. Japan’s utilities surged on speculation the LDP will allow the restart of nuclear reactors, with Tokyo Electric Power Co. jumping 47 percent. Olam International Ltd., the rice trader targeted by short-seller Carson Block, rebounded 11 percent after one of Singapore’s state-owned investment companies raised its stake.

The MSCI Asia Pacific Index (MXAP) advanced 0.7 percent to 128.30 this week, closing on Dec. 19 at it highest since August 2011. Japanese shares led gains as the yen weakened after the LDP captured 294 seats in the 480-member lower house of parliament in Dec. 16 elections.

“This is going to have a tremendous impact on the fortunes of Japanese exporters and the economy,” Ed Rogers, chief executive officer at Tokyo-based Rogers Investment Advisors, said in a Bloomberg Television interview. “The moves in the dollar-yen indicate that the world at large believes that we’re starting on the path to reflation.”

Central Banks

Asia’s benchmark equities index rose about 18 percent from this year’s low on June 4 as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The gauge traded at 14.6 times average estimated earnings compared with 13.9 for the Standard & Poor’s 500 Index and 12.8 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japan’s Nikkei 225 Stock Average (NKY) advanced 2.1 percent this week. The Nikkei 225 has risen about 15 percent since Nov. 14, when the previous government said it would call elections. Shares climbed on expectations the LDP will spend more to boost growth and pressure the central bank to ease monetary policy.

Australia’s S&P/ASX 200 rose 0.9 percent. New Zealand’s NZX 50 Index gained 1.9 percent in Wellington. Hong Kong’s Hang Seng Index dropped 0.4 percent. The Shanghai Composite Index (SHCOMP), which tracks stocks on the larger Chinese exchanges, added 0.1 percent.

Among benchmarks that declined, South Korea’s Kospi Index fell 0.7 percent. The ruling party’s Park Geun Hye was elected president of South Korea on Dec. 20, becoming the first woman to lead Asia’s fourth-biggest economy. Taiwan’s Taiex Index retreated 2.3 percent.

Exporters pared weekly gains, dropping on Dec. 21 after U.S. House Republican leaders canceled a planned vote on Speaker John Boehner’s plan to allow higher tax rates on people with annual incomes above $1 million amid stalled budget talks.

Vote Scrapped

A House leadership announcement said the chamber will hold no more votes until after the Christmas holiday and will return “when needed.” Fewer than two weeks remain to avert more than $600 billion in automatic spending cuts and tax increases, known as the fiscal cliff, set to start in January.

“It’s cutting it quite close,” said Shane Oliver, Sydney- based head of strategy at AMP Capital Investors Ltd., which has almost $130 billion under management. “If they go off the fiscal cliff, the U.S. economy could go into a recession. At stake is the U.S. economy and by implications the global economy.”

Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., finished the week up 1.2 percent at HK$13.4 after dropping 1 percent on Dec. 21. Toyota Motor Corp. (7203), the world’s biggest automaker, slid 2.5 percent on the day, closing the week 5.1 percent higher at 3,785 yen.

Japanese brokerages jumped as the country’s share markets showed signs of a recovery. Nomura rose 18 percent to 431 yen. Daiwa Securities, Japan’s second-largest brokerage, jumped 9.6 percent to 443 yen.

BOJ Action

The central bank expanded its asset-purchase fund to 76 trillion yen ($903 billion) from 66 trillion yen, according to a statement released in Tokyo Dec. 20, and kept its credit-lending program unchanged at 25 trillion yen.

Japanese utilities gained on speculation the LDP, which supported nuclear power during almost six decades of rule, would allow the restart of atomic plants. Tokyo Electric Power Co. (9501) rose 47 percent to 224 yen, its biggest weekly gain since June 2011. Shikoku Electric Power Co. jumped 24 percent to 1,408 yen and Kansai Electric Power Co. increased 22 percent to 956 yen.

Olam gained 11 percent to S$1.56 in Singapore. Temasek Holdings Pte, Olam’s second-biggest shareholder, raised its stake in the company to 18 percent this week, saying the commodity trader represents a “reasonably attractive” investment. Olam has fallen 10.6 percent since short-seller Carson Block said on Nov. 19 the company may fail.

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net