<p>Asian stocks swung between gains and losses as Japanese shares jumped after a party that backs more economic stimulus returned to power. Suppliers to Apple Inc dropped in Taiwan.
Nissan Motor Co, Japan’s second-largest carmaker by revenue, rose 1.9 per cent as the yen slid to the lowest level since April 2011 against the dollar. Tokyo Electric Power Co surged 33 per cent on speculation Japan’s new government will let it restart its nuclear reactors. Hon Hai Precision Industry Co fell five per cent in Taipei, pacing losses among Apple Inc suppliers after Apple’s rating was cut at Citigroup Inc.
The MSCI Asia Pacific Index slipped less than 0.1 per cent to 127.35 as of 1:53 pm in Tokyo after rising and falling as much as 0.3 per cent. The measure capped a 12-day rally on December14, the longest winning streak since January 2004. The MSCI Asia Pacific Excluding Japan Index fell 0.4 per cent to 463.20.
Following the Japanese election, “people would expect more fiscal action from the new administration and they may try to make their currency more competitive,” said Tim Leung, a portfolio manager who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “The market in the Asia-Pacific region has had a pretty good rally. It’s good, but we are not talking about the market moving into a very good valuation yet.”
The 14-day relative strength index of the MSCI Asia Pacific Index climbed to 77 on December 14, rising above the 70 threshold that some traders say signals equities are overheating.
Asia’s benchmark equities index rose almost 12 per cent this year as of December 14 as central banks from the US, Europe, Japan and China took action to spur economic growth. The gauge traded at 14.4 times average estimated earnings as of December 14, compared with 13.6 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average rose 1.4 per cent, heading for the highest close since April. Australia’s S&P/ASX 200 slid 0.1 per cent and New Zealand’s NZX 50 Index fell 0.3 per cent. South Korea’s Kospi Index dropped 0.5 per cent. Hong Kong’s Hang Seng Index fell 0.4 per cent, while China’s Shanghai Composite Index rose 0.5 per cent. Singapore’s Straits Times Index slid 0.2 per cent and Taiwan’s Taiex Index dropped 1.1 per cent.
Japanese shares advanced after the Liberal Democratic Party reclaimed power in a landslide weekend victory. The yen dropped against all of its 16 major counterparts on expectations the new government will expand monetary and fiscal stimulus to defeat deflation.
“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, told Bloomberg Television on Monday. “The moves in the dollar-yen indicate that the world at large believes that we’re starting on the path to reflation.”
Nissan, which gets about 79 per cent of its revenue outside Japan, added 1.9 per cent to 800 yen. Sumitomo Realty & Development Co gained 3.3 per cent to 2,434 yen. Fast Retailing Co, Asian’s biggest apparel chain, rose 3.5 per cent to 20,610 yen.
Tokyo Electric, known as Tepco, surged 33 per cent to 202 yen on speculation the LDP’s victory will pave the way for the utility to restart reactors at its Kashiwazaki Kariwa nuclear plant, the world’s biggest. Shikoku Electric Power Co jumped 16 per cent to 1,320 yen and Kansai Electric Power Co soared 17 per cent to 912 yen.
Futures on the S&P 500 index added 0.4 per cent on Monday. The gauge dropped 0.4 per cent on December 14 as US budget talks overshadowed the Federal Reserve’s plan to expand bond purchases and better-than-estimated economic data.
President Barack Obama and Republican House Speaker John Boehner remained deadlocked during their third White House meeting on next year’s budget. More than $600 billion in tax increases and spending cuts are scheduled to start in January unless Congress acts to avert them.
Apple suppliers dropped after Citigroup cut its rating on the world’s most valuable company to neutral from buy. Hon Hai Precision, which assembles iPhones, lost five per cent to NT$86.90 and Largan Precision Co, which makes lenses for Apple, sank 5.5 per cent to NT$741 in Taipei. Foxconn Technology Co, which makes casings for Apple, dropped 4.6 per cent to NT$89.80.
Fairfax Media Ltd, Australia’s second-biggest newspaper company, rose two per cent to 52 Australian cents after selling its remaining 51 per cent stake in Trade Me Ltd, a New Zealand online auction site.
Asahi Glass Co. dropped 2.3 per cent to 626 yen in Tokyo after the Nikkei newspaper said the glass manufacturer is likely to miss its profit forecast.