Trade deal, easy mon­e­tary pol­icy boost Asia stocks

The China Post - - BUSINESS INDEX & -

Agree­ment on a Pa­cific-wide free­trade agree­ment and hopes ma­jor cen­tral banks will main­tain ex­traloose mon­e­tary poli­cies fired another broad rally in Asia Tues­day, track­ing ad­vances in Europe and New York.

In Hong Kong shares in min­ing gi­ant Glen­core added to the pre­vi­ous day’s surge fol­low­ing re­ports it is in talks to sell its agri­cul­ture busi­ness as it bat­tles weak­en­ing de­mand for raw ma­te­ri­als.

But the main fo­cus was on the Trans-Pa­cific Part­ner­ship, which will see the eas­ing of a num­ber of bar­ri­ers, in­clud­ing to Ja­pan’s clos­eted farm sec­tor and the U.S. car mar­ket.

Af­ter five years, trade rep­re­senta- tives from 12 na­tions on the Pa­cific Rim said Mon­day they had fi­nally ham­mered out a deal to cre­ate the world’s big­gest free-trade area — en­com­pass­ing 40 per­cent of the world econ­omy.

Ja­panese Prime Min­is­ter Shinzo Abe hailed the deal and ex­pressed a hope that China would join at some point.

“It’s the open­ing of a new cen­tury for the Asia-Pa­cific re­gion,” he said in a tele­vised news con­fer­ence Tues­day.

“If China par­tic­i­pates in this sys­tem in the fu­ture, that will con­trib­ute to both Ja­pan’s se­cu­rity and the sta­bil­ity of the Asia-Pa­cific re­gion,” he added.

The ac­cord also earned a strong endorsement from In­ter­na­tional Mon­e­tary Fund chief Chris­tine La­garde, who said it was “not only im­por­tant be­cause of the size ... it also pushes the fron­tier of trade and in­vest­ment in goods and ser­vices to new ar­eas where gains can be sig­nif­i­cant.”

An­a­lysts said the news would boost stocks in the re­gion, adding to an al­ready up­beat mood among in­vestors.

Toshi­hiko Mat­suno, chief strate­gist at SMBC Friend Se­cu­ri­ties Co. in Tokyo, told Bloomberg News the TPP “has a lot of po­ten­tial to be­come a big deal for the U.S. and Ja­pan.”

He added: “Con­cerns over the global econ­omy had be­come in- grained in the mar­ket’s mind­set. It’s pos­si­ble that the TPP has trig­gered some re­gret over hav­ing sold too much.”

US Dol­lar Weak­ness

Con­fi­dence on Asia’s trad­ing floors was al­ready buoy­ant af­ter Fri­day’s be­low-forecast U.S. jobs num­bers, which raised fears that the re­cent tur­moil in global economies was fil­ter­ing through to the world’s big­gest.

The re­port also mud­died the wa­ters for the Fed as it con­sid­ers rais­ing rates, with many ex­perts say­ing its timeline for a hike be­fore 2016 has likely been scut­tled.

Ja­pan’s cen­tral bank holds a two­day pol­icy meet­ing from Tues­day, with spec­u­la­tion it will widen its al­ready vast stim­u­lus pro­gram to try to rein­vig­o­rate the strug­gling econ­omy, while its Euro­pean coun­ter­part is also con­sid­er­ing fur­ther eas­ing.

“Mar­kets con­tinue to be­lieve that weak data will pres­sure cen­tral banks in Europe and Ja­pan to pro­vide more stim­u­lus and will de­lay the U.S. Fed­eral Re­serve in its pur­suit to be­gin with­draw­ing mon­e­tary stim­u­lus,” Matthew Sher­wood, head of in­vest­ment strat­egy at Per­pet­ual Ltd. in Syd­ney said in a note to clients.

This “con­tin­ues to have in­vestors be­lieve that as­set prices can defy the weak growth en­vi­ron­ment.”

With the like­li­hood of a U.S. rate rise re­ced­ing the dol­lar weak­ened against higher-yield­ing, or units.

Eq­uity mar­kets ad­vanced as riskaver­sion eased.

Tokyo ended 1.00 per­cent higher, Syd­ney gained 0.33 per­cent and Seoul was 0.63 per­cent up. Shang­hai was closed for a public hol­i­day.

How­ever, Hong Kong eased 0.28 per­cent in the af­ter­noon on prof­ittak­ing af­ter surg­ing more than 6 per­cent in the pre­vi­ous three ses­sions.

How­ever, Glen­core was 4 per­cent higher. The firm added 17.76 per­cent Mon­day — hav­ing soared more than 70 per­cent at one point — on re­ports of the sale of its agribusi­ness.

Sin­ga­pore’s sov­er­eign wealth fund, Ja­panese trad­ing house Mit­sui & Co.,

riskier, and a Cana­dian pen­sion fund are among po­ten­tial buy­ers of the unit, Bloomberg News re­ported last week.

The agri­cul­tural unit could be worth US$10 bil­lion, ac­cord­ing to re­search cited by Bloomberg News.

Shares in the Swiss-based firm swung wildly last week on fears that sink­ing com­mod­ity prices — caused by a growth slow­down in key mar­ket China — would af­fect its abil­ity to meet out­stand­ing debt obli­ga­tions.

Shares in New York and Europe ended strongly. The Dow surged 1.85 per­cent, the S&P 500 climbed 1.83 per­cent and the Nas­daq was up 1.56 per­cent. Lon­don jumped 2.76 per­cent, Paris soared 3.54 per­cent and Frank­furt gained 2.74 per­cent.

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